Comprehensive TUPE Guide for UK Employers

The Transfer of Undertakings (Protection of Employment) (TUPE) regulations ensure employees’ terms and conditions are preserved when their employment transfers to a new employer and that employers follow the correct legal procedure through the transfer process.

TUPE transfers impact both employees’ rights and employers’ obligations. It is a complex piece of legislation with potentially significant implications for both incoming and outgoing employers when a business is sold, activities are outsourced or brought in-house, or a contract for services is moved over from one provider to another.

If your organisation is due to be partially or completely sold to another employer, or you are switching service providers in a manner that will involve the transfer of employees, you have a statutory responsibility to ensure the TUPE regulations are met throughout the transaction. Failure to do so could result in transferred employees taking legal action against you at an employment tribunal.

For both the outgoing and incoming employers, it will therefore be important to understand the employment liabilities relating to the transfer to avoid the risk of employment law claims and ensure an effective transaction.

In this comprehensive guide to TUPE for UK employers, we set out what TUPE entails and the legal obligations it imposes, and we share practical advice on managing the transfer process.

 

Section A: Understanding TUPE Regulations

 

TUPE applies to employers of all sizes, both in the private and public sector and whether commercial or not for profit, where there is a relevant business transfer or transfer of service provider.

 

1. What is TUPE?

 

The Transfer of Undertakings (Protection of Employment) regulations (TUPE) exist to protect employee rights when the business they work for changes owner.

In broad terms, the TUPE Regulations provide key legal protections for employees when all or part of the business that they work for changes ownership or where employees are engaged in providing a service and there is a change of service provider. The Regulations do this by preserving the rights of transferring employees and protecting them from any unfair disadvantage. These employees will maintain continuity of employment from their original start date with their old employer and should continue to benefit from the same employment terms and conditions.

The regulations apply to businesses of all sizes in the UK. The transfer in question may involve hundreds of employees or even a single employee. In all cases, TUPE provisions are designed to ensure that a new or ‘incoming’ employer cannot change the employee’s contracted hours and rate of pay, bonuses, commissions, benefits and reward schemes, holiday and sickness day allowances, and other terms and conditions within the transferee’s employment contract.

Key TUPE definitions include:

 

a. Undertaking: In the context of TUPE, an ‘undertaking’ refers to any kind of business or economic entity that retains its identity following the transfer. This can include companies, parts of companies, or even distinct service functions within a business.

 

b. Transfer: A ‘transfer’ occurs when an undertaking or service provision is moved from one employer to another, resulting in a change of the entity responsible for the employees.

 

c. Economic Entity: This term refers to an organised grouping of resources that has the objective of pursuing an economic activity, whether central or ancillary. TUPE protects the employees within this entity during the transfer.

 

2. When Does TUPE Apply?

 

In practice, this means TUPE arises in two main scenarios:

 

a. Relevant business transfers

TUPE regulations apply to transactions involving the transfer of all or part of a business from one owner to another.

Types of transfers covered by TUPE include business sales, where a business or part of a business is sold to a new owner, and when TUPE ensures that the employees of that business are transferred to the new employer with their existing contracts of employment. In the case of a merger, where two businesses combine to form a new entity, TUPE ensures that employees from both businesses are transferred to the new entity with their existing terms and conditions.

 

b. Service provider transfers

TUPE also applies to situations where services are outsourced, insourced, or reassigned to a new contractor.

In broad terms, the TUPE Regulations apply in the context of a business transfer or service provision change, where a service provision change can either refer to where activities are outsourced or brought in-house or where a contract for services is moved from one provider to another. In this context, various provisions are made within the Regulations around contractors, where any reference to contractors also applies to subcontractors.

A service provision change can include where a contractor (or subcontractor) takes over the activities from a client, known as outsourcing; where a new contractor (or subcontractor) takes over activities from a previous contractor, known as re-tendering; or where a client takes over activities from a contractor (or subcontractor), known as insourcing. It is essentially where a client engages a contractor (or subcontractor) to undertake work on its behalf or reassigns a contract, including bringing the work in-house. This can include contracts to provide office cleaning, workplace catering and other labour-intensive services, as well as professional business services, including legal and accountancy services.

However, for a service provision change to be covered by the TUPE Regulations, the activities carried out by the old contractor and the new contractor must be ‘fundamentally the same’. This means that if the service requirement significantly alters post-transfer, there would be no service provision change under TUPE. That said, minor differences in the nature of the tasks involved would not normally, without more, be sufficient to mean that the activities are not fundamentally the same. For example, if a company contracts with a catering business to serve hot canteen dinners, where the new contractor continues to provide the same service as the previous contractor, but the ingredients are sourced from a different supplier, TUPE will probably still apply. In contrast, if the old catering contractor served hot dinners in the company canteen, but the contracting company decided to change the terms on expiry of the contract to provide and stock self-service refrigerated food instead, TUPE would be unlikely to apply where a new catering contractor wins the tender.

 

3. Legal Obligations Under TUPE

 

When TUPE applies, employers have specific legal obligations to ensure the process is handled correctly. These responsibilities span the period before, during, and after the transfer, ensuring that employees’ rights are upheld throughout.

Any failure to meet these obligations could result in joint and several liability for potentially costly tribunal claims. Post-transfer, the application of the TUPE Regulations will then determine the extent of the employee’s rights moving forward, where any existing statutory and contractual liabilities will transfer to the new employer.

 

Responsibility	Outgoing Employer	Incoming Employer
Informing Employees	Must inform and consult	Must support with information
Employee Records Transfer	Provide accurate records	Ensure receipt and integration
Preservation of Terms and Conditions	Maintain until transfer	Continue post-transfer
Managing Redundancies	Ensure fair process if needed	May need to manage redundancies
Honouring Collective Agreements	Transfer all agreements	Maintain until renegotiated

 

a. Employer Responsibilities Before the Transfer

Employers must inform and consult with employee representatives (such as trade unions or elected representatives) about the transfer. This includes providing detailed information about the transfer, the reasons for it, and its implications for the employees.

Conducting thorough due diligence is essential to understand the full scope of employee rights and obligations that will transfer to the new employer. This includes identifying any existing liabilities, such as outstanding disciplinary actions or grievances.

 

b. Employer Responsibilities During the Transfer

Employers must ensure that all terms and conditions of employment are transferred to the new employer without alteration. This includes wages, working hours, holiday entitlement, and any other contractual benefits.

Employers are required to consult with employees or their representatives about any measures (changes) that might be taken in relation to the transfer. If the new employer plans to make any changes post-transfer, these must be discussed during the consultation process.

Both the outgoing and incoming employers may also be held liable for any breaches of TUPE obligations, particularly in relation to information and consultation requirements, making clear communication and agreement between the parties involved in the transfer vital.

 

c. Employer Responsibilities After the Transfer

After the transfer, employees must be treated as though they have always been employed by the new employer. Their length of service, accrued benefits, and other rights are preserved under TUPE.

While TUPE protects employees from changes to their terms and conditions, employers must be cautious when making any changes after the transfer. Any changes made must be for economic, technical, or organisational (ETO) reasons that involve changes in the workforce. Otherwise, they may be deemed invalid under TUPE.

Employees dismissed because of the transfer itself or for a reason connected to the transfer that is not ETO-related will likely be deemed unfairly dismissed. Employers must carefully assess the reasons for any dismissals related to the transfer to avoid claims for automatically unfair dismissal.

 

4. Can the TUPE Regulations be Avoided?

 

Given the importance of the TUPE Regulations when it comes to the protection of employee rights, the incoming and outgoing employers cannot opt out of their statutory obligations. However, there may be different circumstances in which the TUPE Regulations will not apply, depending on whether the ‘relevant transfer’ is a qualifying business transfer or service provision change as defined under the Regulations. It may even be possible to structure work and teams to reduce the likelihood that TUPE will apply in certain scenarios.

Due to the highly technical application of the TUPE Regulations, there is often a great deal of uncertainty as to when TUPE applies, although it is commonplace for any potential TUPE-related risks and liabilities to be regulated by contract. This is where the incoming and outgoing employers agree to apportion the costs associated with pre-existing employee liabilities or the risks arising from any tribunal claim for failure to comply with the Regulations. Through the use of contractual warranties and indemnities, the parties can agree who will bear the financial costs before proceeding with the transfer.

 

Section B: Preparing for a TUPE Transfer

 

Preparing for a TUPE transfer requires careful planning and a thorough understanding of the potential impacts on both the incoming and outgoing employers and the affected employees. The success of the transfer will hinge on how well risks are mitigated and challenges dealt with.

 

1. Pre-Transfer Considerations

 

Before initiating a TUPE transfer, employers should take several preparatory steps to minimise operational disruption and safeguard employee rights throughout the process.

 

a. Identify the Scope of the Transfer

Clearly define which parts of the business, services, or employees will be affected by the transfer. This involves understanding the full extent of the ‘undertaking’ being transferred, including all assets, contracts, and personnel.

 

b. Engage with Employee Representatives

Early engagement with employee representatives (e.g., trade unions or elected employee representatives) is vital. This allows for open communication about the upcoming transfer, helping to build trust and reduce anxiety among staff. Providing accurate and timely information to these representatives is not only a legal obligation under TUPE but also a best practice for maintaining a positive work environment.

 

c. Plan for Communication

Develop a clear communication strategy to keep all stakeholders informed throughout the transfer process. This includes preparing responses to potential employee concerns and queries, as well as ensuring that all messaging is consistent and transparent.

 

d. Assess Financial and Legal Implications

Analyse the financial and legal implications of the transfer, including any potential liabilities or costs that may arise. This could include redundancy payments, potential disputes, or the cost of aligning new contracts with existing employment terms.

 

e. Assess Impact on Employees

Evaluate how the transfer will affect employees, particularly in terms of their job roles, working conditions, and job security. Consider whether any redundancies might be necessary and, if so, how these will be handled in compliance with TUPE and employment law.

 

f. Assess Impact on Business Continuity Planning

Assess the impact of the transfer on your business operations. This includes identifying any critical functions that might be disrupted during the transfer and planning how to maintain business continuity. Consider how the transfer might affect customer relations, supply chains, and other key business areas.

 

2. Due Diligence

 

A key stage in the TUPE preparation is due diligence, which should involve a detailed examination of the business or service being transferred, ensuring that all risks, liabilities, and obligations are identified and managed effectively.

 

Due Diligence Area	Details to Review	Status
Employee Contracts	Review terms, conditions, and benefits	Complete/In Progress
Collective Agreements	Identify and review all collective agreements	Complete/In Progress
Financial Liabilities	Assess outstanding debts and obligations	Complete/In Progress
Litigation	Check for ongoing or potential legal disputes	Complete/In Progress
Health and Safety Records	Review compliance and recent incidents	Complete/In Progress

 

Due diligence helps identify potential risks associated with the transfer, such as outstanding employee grievances, ongoing litigation, or undisclosed financial liabilities. By identifying these issues early, employers can take steps to mitigate them before the transfer is completed.

The due diligence exercise should cover aspects including:

 

a. Employee Contracts

Review all existing employment contracts to ensure that terms and conditions are clear and will transfer as required under TUPE. Pay particular attention to any non-standard clauses or benefits that might complicate the transfer.

 

b. Collective Agreements

Examine any collective agreements that are in place, including those negotiated with trade unions. Understand how these agreements will transfer to the new employer and any implications this might have for future negotiations.

 

c. Pension Obligations

Assess the pension schemes in place for transferring employees. TUPE has specific rules regarding the protection of occupational pensions, so it’s important to understand your obligations in this area.

 

d. Employee Liabilities

Identify any existing liabilities related to employees, such as outstanding disciplinary actions, grievances, or claims. These liabilities will transfer to the new employer, so it’s important to have a clear picture of what these entail.

 

e. Ongoing Litigation

Review any ongoing or potential litigation involving the employees or the business as a whole. Understanding these legal challenges is crucial for both the outgoing and incoming employers.

 

f. Redundancy and Restructuring Plans

If redundancies or restructurings are planned as part of or after the transfer, ensure these are compliant with TUPE and that all processes are in place to handle them legally and fairly.

 

g. Financial Records

Examine the financial health of the business or service being transferred, including payroll records, outstanding debts, and any other financial commitments. This helps ensure that the incoming employer is fully aware of any financial risks associated with the transfer.

 

h. Health and Safety Records

Review health and safety records, including any ongoing compliance issues, recent accidents, or safety audits. This helps ensure that the new employer can continue to meet health and safety obligations without interruption.

 

Section C: Employee Consultation and Information

 

Under TUPE, employers are legally obligated to consult with their employees and provide them with specific information regarding the transfer. While this requirement is mandatory, it also helps to maintain trust and morale during what can be a period of uncertainty for employees.

 

1. TUPE Consultation Requirements

 

Under TUPE, employers have to consult with employees or their representatives about the impending transfer. The consultation process should be used to ensure that employees are fully aware of what the transfer will involve and that they have the opportunity to voice any concerns or ask questions.

Employers must consult with recognised trade unions or, where there is no recognised union, with elected employee representatives. In smaller businesses, this consultation may sometimes be conducted directly with the affected employees themselves.

The consultation process must address several key areas. Firstly, employees must be informed that a transfer is going to take place, including when it is expected to happen and the reasons behind it. Additionally, the legal, economic, and social implications of the transfer for the affected employees should be clearly explained. This may include potential changes to their terms of employment, workplace location, or other conditions. Any measures that either the outgoing or incoming employer intends to take concerning the employees, such as restructuring, redundancy plans, or changes to job roles, must also be discussed.

The timing of the consultation is important. It must take place “long enough before a relevant transfer” to allow for meaningful dialogue. Although there is no specific timeframe mandated by law, the consultation must be conducted early enough to allow employees to properly consider and discuss their views and concerns before any final decisions are made.

 

2. Providing Information to Employees

 

It is the employer’s responsibility to communicate to affected employees what the transfer means for them. This information must be communicated in a clear and timely manner.

 

a. Details of the Transfer

Employees should be informed about the basic details of the transfer, including the identity of the new employer, the date of the transfer, and the reasons behind it. Providing these details sets the stage for employees to understand the context and significance of the changes.

 

b. Legal, Economic, and Social Implications

Employers have to explain how the transfer will affect employees’ jobs, terms and conditions of employment, and other employment-related factors. This might involve potential changes in work location, job roles, and reporting lines. Clearly outlining these implications helps employees prepare for the transition and understand how it will impact their professional lives.

 

c. Measures Envisaged by the New Employer

If the incoming employer plans to implement any changes post-transfer, such as restructuring, redundancy plans, or alterations to job roles, these must be communicated to the employees. It is important that these measures are clearly explained so that employees understand how they might be affected by the transfer.

 

d. Employee Rights and Obligations

Employees should be fully informed about their rights under TUPE, including the assurance that their existing terms and conditions will be transferred to the new employer. Additionally, employees should be made aware of any processes available to raise concerns or grievances related to the transfer.

 

e. Early Notification

Information should be provided to employees as early as possible in the process. Ideally, this means once the decision to transfer has been made and the relevant details are available, but well before the actual transfer occurs. Early notification gives employees time to understand the implications and raise any concerns they may have.

 

f. Consultation Period

During the consultation period, employers are required to provide ongoing updates as new information becomes available or as plans evolve. This ensures that employees are kept fully informed and can participate meaningfully in the consultation process, allowing their feedback and concerns to be considered.

 

g. Final Confirmation

Before the transfer date, employees should receive final confirmation of the transfer details, including any agreed-upon measures that will take effect after the transfer. This final communication should clarify any remaining questions and provide reassurance about what to expect, helping to alleviate any lingering uncertainties.

 

3. Communication Best Practices During the TUPE Process

 

Effective communication is vital throughout the TUPE process. It not only ensures that employees are well-informed but also helps to build trust and maintain morale during what can be a challenging time.

 

a. Transparency
Maintaining transparency with employees throughout the transfer process is essential. Providing clear and honest information from the outset reduces the likelihood of rumours and misinformation spreading, which can otherwise lead to unnecessary anxiety and confusion among staff.

 

b. Active Listening
Employees and their representatives should be encouraged to voice their concerns and ask questions. Demonstrating that their input is valued and taken seriously is crucial for maintaining a positive relationship during the transfer. This approach also helps to identify and address potential issues before they escalate.

 

c. Regular Updates
Regular updates on the progress of the transfer should be provided to keep employees informed. Even if there are no significant developments, keeping the communication lines open reassures employees that they are being kept in the loop and that their interests are being considered.

 

d. Tailored Communication
Communication should be tailored to address the specific concerns of different employee groups. For example, managers might be more focused on the strategic implications of the transfer, while front-line staff may be more concerned about changes to their day-to-day responsibilities. Addressing these varied concerns appropriately ensures that all employees feel supported and informed.

 

e. Support Resources
Providing access to support resources is another key aspect of effective communication during a TUPE transfer. Employees may benefit from the assistance of HR representatives, legal advice, or other support services to help them understand the implications of the transfer for their particular situation. Offering these resources can greatly reduce uncertainty and help employees navigate the transfer more confidently.

 

Section D: Managing the Transfer Process

 

No matter the size of your upcoming TUPE transfer, it is important to follow a comprehensive transfer plan to ensure legal compliance, minimal disruption to employees, and smooth continuation of workplace activities. Using the Advisory, Conciliation and Arbitration Service (ACAS) recommendations to manage a TUPE transfer will help ensure productivity, efficiency and customer satisfaction are maintained throughout the process.

This TUPE checklist will explore those recommendations to help employers meet their legal obligations and keep their businesses running without disruption while managing a transfer of staff.

Keep in mind that much of the information provided here is for general guidance only and may need to be adapted to suit different circumstances.

 

1. Identify affected employees

 

Once the proposed transfer has been agreed, your first task will be to identify the employees included in the transfer. This is typically relatively straightforward in business TUPE transfers, which involve the selling or merging of companies, as all employees within the business being sold (or the specific part of the business being sold) will be transferred to the new employer.

Identifying affected employees in TUPE transfers which involve service providers can prove more complex, as employees involved in the provision of that service may have other responsibilities within the business. In such cases, it is generally accepted that any employee who spends more than 50% of their time performing tasks relating to the transferred service will be included in the transfer.

It is worth noting at this stage that employees who are not included in the transfer may still be affected by the transition. As a conscientious employer, you must consider who among your remaining workforce may be negatively affected during the transfer and take steps to mitigate any anticipated problems.

 

2. Inform and consult

 

Step two of the TUPE transfer is arguably the most important. Employers have a legal obligation to inform their employees of the scheduled transfer and consult with them about its implications. You are not bound by a set time scale in which the consultation must be completed. The priority during this stage of the TUPE transfer should be making sure all relevant parties have accurate and complete information – transparency is key. Whom the outgoing employer must consult with will depend on the size of the organisation and whether their employees are members of trade unions.

During this stage of the transfer, you must consult with one of the following:

 

a. Trade union representatives: if any of the affected employees are members of a recognised trade union.

 

b. Employee representatives: if the affected employees are not members of a union. These representatives may be chosen for the sole purpose of participating in the TUPE transfer consultation.

 

c. The affected employees themselves: if there are fewer than ten employees working for the organisation and they are not members of a union.

During the consultation stage, it is essential that the following information is included in the discussion and passed on to the affected employees:

 

a. Formal notice that the transfer will go ahead.

b. The date or predicted date that the transfer is due to take place.

c. The reason the decision to transfer was made.

d. What effect the transfer will have on employees, including financial, social and legal implications.

e. Measures the outgoing employer will take that may affect remaining employees, if this is applicable.

f. Measures the incoming employer will take post-transfer that may affect transferring employees, if these measures are known.

 

Failure to meet the requirements outlined in this stage of the TUPE transfer could result in serious financial repercussions for the employer, should the employee bring a case before an employment tribunal. The old and new employers can be held jointly or individually responsible and may be ordered to pay every affected employee up to 13 weeks’ wages in compensation.

 

3. Employee Liability Information (ELI)

 

Outgoing employers have a legal responsibility to pass employee liability information on to the incoming employer prior to the TUPE transfer. This is also known as ‘due diligence’ and applies in all service contract negotiations and business sales, even when the TUPE regulations do not apply.

The employee liability information must be submitted in writing and no less than 28 days prior to the date of the transfer.

The information passed on to the new employer should include:

 

a. The names and ages of transferring employees.

b. The transferring employees’ complete contracts of employment.

c. Details of all formal disciplinary action taken against transferring employees within the two years prior to the transfer.

d. Details of all formal grievances raised by transferring employees within the two years prior to the transfer.

e. Details of any legal action taken against the old employer by any transferring employees within the two years prior to the transfer.

f. Details of any legal action which the old employer has reason to believe will be taken against them by any transferring employees.

 

Should you fail to pass this information on to the new employer before the 28-day deadline, they may take legal action against you to pursue compensation. Penalties for failing to submit employee liability information to a new employer start at £500 per employee and have no maximum limit.

 

4. Post-Transfer Measures

 

The new employer must take steps to ensure all transferred employees understand and can comfortably perform their duties post-transfer. Once the transfer is complete, the new employer may wish to implement the measures discussed at the consultation stage, which could include minor changes to working arrangements that do not affect the transferred employees’ contracts of employment. With the exception of pensions, all the employees’ previous employment conditions are protected by the TUPE transfer.

The measures implemented at this stage may include:

 

a. Relocating employees to a different workplace

b. Making redundancies

c. Changing shift patterns

d. Amending pension provisions

e. Altering staff pay dates

 

Incoming employers should not seek to ‘harmonise’ their new employees’ contractual terms and conditions with those of their existing workforce, unless there is a valid reason for the adjustments which has nothing to do with the transfer itself. Arbitrarily changing a transferred employee’s terms and conditions would be a breach of TUPE transfer regulations.

A change to employment terms and conditions may be permitted under TUPE if one or more of the following situations apply:

 

a. The reason for the change is valid and not related to the transfer

b. The change would create a better situation for the affected employee

c. Permission for variation in terms and conditions is written into the employee’s existing contract (e.g. they have a mobility clause)

d. The changes are necessary to accommodate vital economic, technical or organisational adjustments within the business AND broader changes to the workforce are also being made (i.e. the number of employees or the roles they fulfil).

 

Unless there is an extremely strong justification for adjustments to the new employees’ terms and conditions, incoming employers should avoid making any changes immediately following the transfer, as this would likely be viewed as a breach of TUPE regulations.

 

Section E: Post-Transfer Obligations

 

Once the transfer is complete, the incoming employer assumes several important responsibilities toward the transferred employees. These responsibilities are critical for maintaining compliance with TUPE and ensuring that employees are treated fairly and equitably during and after the transition.

Post-transfer responsibilities towards employees include:

 

1. Preservation of Employment Terms

One of the core principles of TUPE is that the incoming employer must preserve the terms and conditions of employment that were in place with the outgoing employer. This includes wages, benefits, working hours, and other contractual terms.

 

2. Continuity of Service

The incoming employer must recognise the continuity of employment for all transferred employees. This means that employees retain their original start dates and are not considered new hires. This continuity is important for calculating entitlements such as redundancy pay, pension rights, and holiday accrual.

 

3. Honouring Collective Agreements

If there were any collective agreements in place with trade unions or employee representatives, the incoming employer is required to honour these agreements post-transfer. This includes any pay scales, grievance procedures, or other negotiated terms that were part of the previous employment arrangements.

 

Section F: Making Contract Changes

 

When it comes to TUPE and contractual terms, the incoming employer is required to take on transferring employees on their existing terms and conditions of employment — and the underlying principle of the TUPE Regulations is to protect and preserve employees’ existing rights under their contract of employment with the outgoing employer — the new employer will generally be prohibited from making any changes to these employment contracts where the sole or principal reason for the contractual variation is the transfer.

However, the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 introduced certain amendments to the 2006 Regulations, making it potentially easier for employers to effect changes to terms and conditions of transferring employee contracts in the following circumstances:

 

a. The contract in question allows for a change to be made, such as the application of an existing mobility or flexibility clause.

b. Where the sole or principal reason for the contractual variation is an economic, technical, or organisational (ETO) reason entailing changes in the workforce, but only where both the employer and employee agree to the proposed change.

 

Technically, it is, therefore, possible to implement changes to a contract of employment where the sole or principal reason is either a reason unconnected with the transfer or an ETO reason entailing a change in the workforce. It is also possible to make changes where the terms of the employment contract permit the employer to make such a variation. Still, if the sole or principal reason for the change is the transfer, any purported variation will be void, even where an employee agrees to have their contract varied by their new employer.

In the absence of a valid ETO reason or contractual mechanism permitting any variation, the best way for an incoming employer to vary the terms and conditions of transferring employees is to wait. Although the majority of TUPE rights do not expire, it may be easier as time progresses for the incoming employer to distance any changes to their employees’ contracts from the transfer.

That said, in theory, the protection period provided for employees by the TUPE Regulations is indefinite following a relevant transfer; as such, if the new employer attempts to change the employee’s contractual terms and conditions because of the transfer, this can be construed as unlawful, even years later.

In circumstances where an employee seeks to change an employee’s contractual terms due to the transfer, any amendments made will be void, and the employer will be in breach of contract. In addition, if the transferring employees’ terms and conditions of employment are changed either before the transfer or afterwards, and those changes are worse than the original terms, the employee could forcibly resign and bring a claim for constructive unfair dismissal. Any employer looking to make changes in the context of a TUPE transfer should, therefore, always seek specialist employment law advice to help navigate these potential pitfalls.

 

Section G: TUPE and Redundancies

 

In addition to the transfer of the same contractual terms and conditions, transferring employees will carry with them their continuous service from their original start date, maintaining continuity of employment in the context of their right to claim unfair dismissal.

As such, when it comes to TUPE and redundancy, employees with at least two years of service will be protected from being made redundant by reason of the transfer. Under the TUPE Regulations, any redundancy — either before or after the transfer takes place — will be automatically unfair where the sole or principal reason for the dismissal is the transfer.
The only exception to this rule against redundancy is where an employee’s dismissal is for an ETO reason, entailing changes in the workforce, which essentially means a change in the number of employees or in the functions that they perform. For example, where the incoming employer inherits new employees but needs to undergo a restructure based around a legitimate business need, leading to some of the new employees being made redundant, assuming a fair process is followed, including selection from both the existing and transferring workforce, the redundancy dismissals would not necessarily be unfair.

Importantly, any dismissal by reason of redundancy will still be subject to the rules around fair dismissals, where all proper redundancy procedures must be followed, including making offers of any suitable alternative employment. This means that even where an employer can rely on an ETO defence and a dismissal is not automatically unfair, it may still be unfair for other reasons, such as a failure to properly consult in a redundancy context.

It is also worth noting that where redundancies are made, a true ETO reason must exist, where this must not be a smokescreen to enable the employer to streamline the workforce after the transfer has taken effect. As with changes to any contractual terms and conditions following a transfer, where redundancies need to be made, it may be easier for the incoming employer to distance any redundancies from the transfer itself. Again, any employer looking to make redundancies in the context of a TUPE transfer should seek specialist employment law advice to help avoid falling foul of the law.

 

Section H: Who is Protected by TUPE?

 

TUPE protects employees who are directly employed by the business or organisation being transferred. This includes both full-time and part-time employees, as well as those on fixed-term contracts. TUPE ensures that these employees’ existing terms and conditions of employment are preserved when they transfer to the new employer.

Key groups protected by TUPE include:

 

1. Permanent Employees

All employees with permanent contracts who are part of the undertaking being transferred are covered by TUPE. This means their employment contracts, including salary, benefits, and other terms, transfer automatically to the new employer.

 

2. Fixed-Term Employees

Employees on fixed-term contracts are also protected by TUPE. Their contracts and terms of employment transfer to the new employer under the same conditions as permanent employees.

 

3. Part-Time Employees 

Part-time employees are equally protected by TUPE. Their part-time status does not affect their rights under the regulations; they retain their existing terms and conditions with the new employer.

 

4. Employees on Sick Leave or Parental Leave

Employees who are on long-term sick leave, maternity leave, paternity leave, or any other statutory leave at the time of the transfer are also protected by TUPE. Their rights remain intact, and the new employer must honour their leave and any related benefits.

Under the TUPE Regulations, the terms and conditions of employment of any transferring employees will automatically transfer to their new employer on the transfer date, including any rights around parental leave and statutory entitlements.

For example, there is no continuous service requirement for statutory maternity leave, meaning employees will be entitled to 52 weeks’ leave, regardless of how long they have been with their employer. If the employment contract makes provision for enhanced maternity rights, these rights will transfer to the new employer, who will also be responsible for the payment of any maternity pay, where applicable. In the context of statutory maternity pay, the employee must have accrued 26 weeks’ continuous service, continuing into the 15th week before the expected week of childbirth, where any service with the old employer will count towards this.

 

Section I: TUPE Risks for Employers

 

TUPE considerations are far-reaching, requiring specialist knowledge and experience to identify and advise on the full ambit of legal duties and liabilities. Specific areas of risk and consideration for employers relating to TUPE include:

 

1. Relevant Transfers

While in some circumstances, it may be obvious that TUPE applies, this may not always be the case. ‘Relevant’ transfers could include selling or buying part or all of a business as a going concern, outsourcing or taking over a lease or licence of premises to operate the same business from those premises. It is best to take advice in light of the specific transaction and relevant transfer to ensure lawful procedures are followed and employees’ rights are protected.

 

2. Transfer of Employment Liabilities

Affected employees retain their rights to claim for unfair dismissal, redundancy or discrimination, or unpaid wages, bonuses or holidays and personal injury claims. Incoming employers will require full knowledge of existing and assessment of potential employment liabilities.

 

3. Dismissals or Redundancies

Dismissals are deemed automatically unfair if the sole or principal reason for the dismissal is the transfer. However, dismissals may not be automatically unfair where the dismissal is for an economical, technical or organisational reason (an “ETO” reason) requiring a change in the workforce. Relying on an ETO reason will require professional guidance to avoid falling foul of this complex area.

 

4. Changing Employees’ Terms and Conditions

Attempts to change terms and conditions of employment where the sole or principal reason for the change is the transfer will be rendered void unless there is a valid ETO reason involving workforce changes. If changing terms unrelated to the transfer or relying on changes under TUPE 2014 to make changes, take specific legal guidance to avoid future legal problems such as claims for constructive dismissal.

 

5. TUPE and Data Protection

TUPE requires the outgoing employer to disclose specific ‘Employer Liability Information’, which includes personal data about affected employees. This is considered lawful disclosure of data under the GDPR, which is made 28 days prior to the transfer. Requests for additional or specific information relating to employees (such as absence records) should be considered under advice to avoid breaching duties under the GDPR.

 

6. TUPE and Pensions

Under the TUPE Regulations, where applicable, employees have the legal right to transfer to the new employer on their existing terms and conditions of employment, together with all their existing employment rights and liabilities intact. However, certain pension rights do not transfer under the TUPE Regulations, where there are special provisions that deal with pensions under certain occupational pension arrangements.

If the outgoing employer provided a pension scheme, the incoming employer must provide some form of pension arrangement for those eligible, although this does not have to match the previous arrangement, but must simply meet the minimum standards required.

 

7. TUPE and Insolvency

When it comes to insolvency scenarios, the rules under the TUPE Regulations are far more relaxed, where inherited employee liabilities are not so onerous for the incoming employer, making it easier for a business to be sold as a going concern.

Where the outgoing employer is insolvent, the incoming employer will not be liable for some of the unpaid debts owed to employees up to a prescribed amount, such as statutory redundancy pay, where these can instead be recovered by employees from the National Insurance Fund. There is also greater scope in the context of insolvency for the incoming employer to vary terms and conditions of employment after the transfer has taken place, where any variation is designed to ensure the survival of the business and safeguard jobs.

In other insolvency cases, the TUPE Regulations may not apply at all because the business has gone into insolvent liquidation rather than being sold as a going concern.

 

Section J: Overcoming TUPE Challenges

 

During a TUPE transfer, several common issues can arise that may lead to disputes and legal challenges. Disagreements over the preservation of terms and conditions are a frequent source of conflict. Employees may contest perceived or actual changes to their contracts, particularly if they believe these changes disadvantage them. This can be compounded if employers fail to consult adequately with employees or their representatives, leading to legal challenges. Insufficient information sharing, inadequate time for consultation, or failure to engage with the correct representatives are typical examples where consultation processes fall short.

Unfair dismissal claims can also arise if employees are dismissed as a result of the transfer. Employees may argue that their termination was not based on valid Economic, Technical, or Organisational (ETO) reasons or that it was solely related to the transfer itself. Additionally, disputes between the outgoing and incoming employers can occur regarding liabilities that transfer along with the employees, such as outstanding grievances, ongoing litigation, or financial obligations like unpaid bonuses or commissions.

To address these challenges, early and transparent communication with all stakeholders, including employees, their representatives, and the incoming employer, is crucial. Setting clear expectations and providing comprehensive information from the outset helps reduce misunderstandings and build trust. Meaningful consultation involves not just informing employees of decisions but actively listening to their concerns, considering their input, and being open to adjustments based on their feedback.

If disputes do arise, mediation offers a less adversarial and more collaborative approach to resolving issues before they escalate to formal legal proceedings. Mediation can lead to quicker, more satisfactory outcomes for all parties involved. Maintaining clear and thorough documentation throughout the transfer process is also vital. This includes records of all communications, consultations, agreements, and any changes made to employee terms and conditions. A robust paper trail is invaluable if disputes eventually end up in court.

Engaging legal counsel early in the process ensures compliance with TUPE regulations and provides guidance on managing specific risks. Legal experts can help avoid potential pitfalls that could lead to disputes.

 

Section K: Summary

 

A TUPE transfer, governed by the Transfer of Undertakings (Protection of Employment) Regulations, is a legal framework in the UK that protects employees’ rights when a business or service is transferred to a new employer.

In practice, TUPE transfers are often fraught with potential for disputes, as both employees and employers deal with the complexities of transferring employment from one entity to another.

One of the primary risks is the failure to properly inform and consult with employees before the transfer. Inadequate consultation can lead to legal challenges and financial penalties. Employers must ensure that employees are fully aware of the transfer details, including how it will affect their terms and conditions of employment.

Maintaining employees’ existing terms and conditions is another key concern. Any attempt to change these terms simply because of the transfer is likely to be unlawful unless justified by valid Economic, Technical, or Organisational (ETO) reasons. Changes made without proper justification can result in claims of unfair dismissal or breach of contract.
Handling redundancies post-transfer also poses risks. Redundancies directly related to the transfer can be considered unfair unless they meet specific ETO criteria. Employers must carefully plan the transfer process, ensuring compliance with TUPE regulations to avoid potential disputes and legal complaints.

 

Section L: Need Assistance?

 

DavidsonMorris provides specialist legal advice to employers on the legal implications of TUPE. We can advise on all aspects of TUPE and HR legal risk management, including:

 

a. Whether TUPE is applicable to the transaction

b. Employee rights, both statutory and under the contract of employment, such as continuity of employment, pay and accrual of leave

c. Outgoing employer duties, rights & powers such as disclosure of Employee Liability Information, duty to inform & consult with employees through appropriate elected representatives,

d. Incoming employer duties, rights & powers

e. Redundancies & dismissals for ETO reasons

f. Transfer of collective agreements

g. Changing or attempting to harmonise terms and conditions post-transfer

 

We are experienced in advising both transferors (the outgoing employer) and transferees (the incoming employer) on the required legal process to follow and on their respective employment liabilities as triggered by the transfer.

We can help to develop strategies that enable you to ensure full commercial benefit is derived from the transfer, by leveraging your powers and rights as an employer and managing the risk of more complex requirements such as varying employee terms or redundancy.

Contact us for specialist advice.

 

Section M: TUPE FAQs

 

What is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations. It is a set of UK laws that protect employees’ rights when a business or service they work for is transferred to a new employer. TUPE ensures that employees’ existing terms and conditions of employment are maintained after the transfer.

 

What are the TUPE Regulations?
The Transfer of Undertakings (Protection of Employment) Regulations 2006, otherwise known as the TUPE Regulations, set out the legal provisions that govern the transfer of undertakings. In broad terms, these provide legal protections for employees when a business changes ownership.

 

When does TUPE apply?
TUPE applies when a business or part of a business is transferred from one employer to another. It also applies during service provision changes, such as outsourcing, insourcing, or when a contract is awarded to a new provider. The key factor is that the business or service must retain its identity after the transfer.

 

What are my responsibilities as an employer under TUPE?
As an employer, you are required to inform and consult with employees or their representatives about the transfer. You must also ensure that all employees’ terms and conditions of employment are preserved and that their employment continuity is maintained. Additionally, you should manage any necessary changes in compliance with TUPE regulations.

 

What is the 50 rule in TUPE Regulations?
When it comes to which employees are covered by the TUPE Regulations and will transfer with the business, if an employee spends 50% or more of their working time on the transferring business, they will typically transfer with that business.

 

Do I need to consult with employees before a TUPE transfer?
Employers are legally obligated to consult with employees or their representatives before a TUPE transfer takes place. This consultation should begin as early as possible and cover details about the transfer, its impact on employees, and any proposed changes to their terms and conditions.

 

Is there a time limit on TUPE Regulations?
Following a transfer, the protection period provided for employees by the TUPE Regulations is indefinite. If the new employer attempts to change the employee’s contractual terms and conditions because of the transfer, this may be unlawful, even years post-transfer.ts from you when starting a new job, including your passport as evidence of your identity and to prove your right to legally undertake work in the UK.

 

Can I make changes to employees’ terms and conditions after a TUPE transfer?
Changes to employees’ terms and conditions are generally not allowed if they are made solely because of the transfer. However, changes may be permissible if they are for valid Economic, Technical, or Organisational (ETO) reasons that involve changes in the workforce. Any changes must be carefully managed to comply with TUPE.

 

What should I do if redundancies are necessary after the transfer?
If redundancies are necessary post-transfer, they must be for valid ETO reasons. Employers must follow a fair redundancy process, which includes consulting with employees or their representatives, using objective selection criteria, and providing statutory redundancy pay where applicable.

 

What happens if an employee refuses to transfer under TUPE?
If an employee refuses to transfer, their employment will typically end on the transfer date. This termination is not considered a dismissal, so the employee is not entitled to redundancy pay or compensation. It’s important to document the refusal and understand the employee’s reasons.

 

How do I handle disputes or grievances during a TUPE transfer?
Disputes can arise during a TUPE transfer, particularly if employees feel their rights are being compromised. To manage disputes effectively, engage in early and transparent communication, use mediation where necessary, and maintain clear documentation of all decisions and communications.

 

What happens to collective agreements after a TUPE transfer?
Collective agreements that were in place before the transfer continue to apply afterwards. The new employer must honour these agreements until they are renegotiated or replaced.

 

Can employees be dismissed due to a TUPE transfer?
Dismissing employees solely because of a TUPE transfer is generally considered unfair dismissal. However, dismissals may be lawful if they are made for valid ETO reasons. Employers must ensure that any dismissals are justified, fair, and compliant with TUPE and employment law.

 

Section N: Glossary

 

Term	Definition
TUPE	Transfer of Undertakings (Protection of Employment) Regulations; UK law protecting employees’ rights during a business transfer.
Undertaking	A business, part of a business, or service that is being transferred to a new employer under TUPE.
Transfer	The process of moving an undertaking from one employer to another, triggering the application of TUPE regulations.
Economic, Technical, or Organisational (ETO) Reasons	Valid reasons related to changes in the workforce, such as economic necessity, technical restructuring, or organisational changes, which may justify changes to employment terms or redundancies post-transfer.
Employee Representatives	Trade unions or elected representatives who are consulted by the employer during a TUPE transfer.
Continuity of Employment	The principle that employees’ length of service and employment rights are preserved after a TUPE transfer.
Collective Agreement	Agreements negotiated between employers and trade unions that affect employees’ terms and conditions of employment.
Redundancy	The termination of employment due to the employer’s need to reduce the workforce, which must be handled in accordance with TUPE.
Due Diligence	The process of investigating and assessing the liabilities, contracts, and obligations of the business or service being transferred.
Consultation	The process of informing and engaging with employees or their representatives about the transfer and its implications.
Dispute Resolution	Methods used to resolve conflicts arising during a TUPE transfer, such as mediation or legal action.
Automatic Unfair Dismissal	A dismissal deemed automatically unfair if it is solely related to the TUPE transfer without valid ETO reasons.
Service Provision Change	A type of TUPE transfer that occurs when a service is outsourced, insourced, or moved to a new contractor.
Retention Bonus	A financial incentive offered to key employees to encourage them to stay with the new employer after a TUPE transfer.

 

Section O: Additional Resources

 

UK Government Guidance on TUPE
https://www.gov.uk/transfers-takeovers
Comprehensive guidance from the UK government on TUPE regulations, including when TUPE applies, employer responsibilities, and employee rights.

 

ACAS (Advisory, Conciliation and Arbitration Service)
https://www.acas.org.uk/tupe
ACAS provides detailed guidance on TUPE transfers, offering practical advice for both employers and employees, with a focus on consultation, rights, and dispute resolution.

 

Chartered Institute of Personnel and Development (CIPD)
https://www.cipd.co.uk/knowledge/fundamentals/emp-law/tupe/factsheet
The CIPD offers a factsheet that covers the key aspects of TUPE, including legal considerations, best practices for managing transfers, and how to handle changes in employment terms.

 

Law Society of England and Wales – TUPE Overview
https://www.lawsociety.org.uk/topics/employment-law/tupe-transfers
The Law Society provides an overview of TUPE, focusing on the legal obligations of employers and offering advice on managing legal risks during a transfer.

 

ACAS Helpline
https://www.acas.org.uk/contact
ACAS provides a helpline offering free, confidential advice on employment rights and responsibilities, including specific guidance on TUPE-related issues.