What Is TUPE? A Guide for Employers on TUPE Transfers and Employment Obligations.

If your business is buying another company, outsourcing services, taking over an existing contract or bringing a service back in-house, you may have obligations under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

TUPE transfers can expose employers to significant legal and financial risks if handled incorrectly. Employees may automatically transfer with their existing employment rights, and failures to comply with consultation requirements can result in costly Employment Tribunal claims.

This guide explains when TUPE applies, the responsibilities placed on employers and the practical steps businesses can take to minimise risk during a transfer.

If you’re an employee who wants to discuss their legal rights, or you’re an employer who wants to avoid any employment tribunal claims, our solicitors can help. For more information, please visit our employment law page or contact our solicitors directly on 0203 007 5500.

What does TUPE mean?

TUPE stands for Transfer of Undertakings (Protection of Employment). TUPE regulations protect a company employees’ rights in a circumstance where part or all of a business changes from one employer to another. Therefore, under TUPE, the new employer will take over any existing employment contract, which includes:

• All previous terms and conditions of employment, such as the job description, working hours, pay (including when and how often), among others.
• Failures of the previous employer in observing an employee’s rights. Therefore, an employee could claim discrimination against the new employer, even if the discrimination took place with the old employer.
• Continuous employment. The employee’s start date remains the same as before the transfer, so employment remains continuous.
• Any collective agreements between an employee and previous employer. For example, if an employee agreed with the last employer over a subsidised gym membership.

TUPE regulations cover some transfers in the public sector and all qualifying transfers in the private sector. Furthermore, TUPE covers company mergers where two companies close and combine to form one new company.

When does TUPE apply to your business?

TUPE commonly applies in two situations:

A Business Transfer

This happens when a business, or part of a business, moves from one employer to another.

Examples include:

• Selling a business
• Purchasing another business
• Mergers
• Acquiring part of a business

For TUPE to apply, the business activities must generally continue in a similar form after the transfer.

A Service Position Change

A service provision change may occur when:

• A service provided in-house (e.g. cleaning, workplace catering) is awarded to a contractor after the transfer. For example, if a company employs a cleaner and then after the transfer, the new employer decides to use an external cleaning company instead.
• A contract ends, and the work is transferred in-house by the former client. For example, if a company is using a digital marketing agency, and then after the transfer decides to bring all the digital marketing work in-house.
• A contract ends and is given to a new contractor after the employer transfer.

What happens during a TUPE Transfer?

One of the biggest concerns employees have is whether they will lose their rights when moving to a new employer.

In most cases, TUPE is designed to prevent that from happening.

Where TUPE applies, the new employer generally takes over:

• Existing employment contracts
• Continuous service
• Holiday entitlement
• Agreed contractual benefits
• Existing employment rights

The new employer will also generally inherit employment-related rights, obligations and liabilities connected to the transferring employees, although some exceptions may apply depending on the circumstances of the transfer. As a result, employees should usually continue their employment on broadly the same basis as before the transfer.

How long does TUPE protection last?

The protection period by TUPE is indefinite. If the new employer attempts to change the terms and conditions of a contract because of the transfer, it’s illegal. TUPE can still protect an employee even years after the transfer. The difficulty comes with proving that any changes result from the transfer, which can become harder over time.

How can employers prepare for a TUPE transfer?

Employers should identify potential TUPE issues as early as possible. This includes reviewing employee contracts, understanding any collective agreements, assessing ongoing grievances or Employment Tribunal claims and ensuring that information and consultation obligations can be met within the proposed timescale.

Early legal advice can help businesses understand which employees are likely to transfer, identify potential liabilities and avoid making decisions that could later be challenged as automatically unfair dismissals or unlawful contract changes.

Employer Responsibilities

	Outgoing Employer (transferor)	Incoming employer (transferee)
Before the transfer	Inform and consult employee representatives about the transfer and any planned “measures”. Provide employee liability information at least 28 days before the transfer. Share only the personal data that’s needed (anonymised during due diligence where possible), with a lawful basis under UK GDPR and particular care for health, sickness and trade union data	Tell the outgoing employer about any measures you plan, so consultation can happen, and inform and consult your own affected employees where relevant. Agree data-sharing terms in the transaction documents
During the transfer	Employees’ contracts pass to the new employer by law. Pay wages, commission and accrued holiday pay up to the transfer date, issue P45s, and pass on holiday balances and details of any arrears, bonuses or deductions in progress. Hand over personnel files, right-to-work checks, absence and holiday records, and any live disciplinary or grievance files	Takes over contracts, continuous service and accrued liabilities. Set up PAYE and pension contributions before the first payday, then pay staff from the transfer date on the same rates, pay dates and benefits, honouring any holiday carried over. Check the records you receive against the employee liability information and keep the right-to-work records
After the transfer	Remains jointly liable for any failure to inform and consult	Can’t change terms because of the transfer, except in limited circumstances. Update your privacy notice and tell transferred employees how you use their data. Keep it secure, apply retention periods, and diarise follow-up right-to-work checks for staff with time-limited permission to work

TUPE checklist for employers

1. Check whether TUPE applies. Work out if it’s a business transfer or a service provision change, and identify exactly who is assigned to the work.
2. Start due diligence early. Review contracts, pay, benefits, claims and disciplinary history for the transferring staff, and build in warranties and indemnities where you can.
3. Plan your measures. Decide as soon as possible whether you intend to change roles, locations or terms, because that triggers consultation.
4. Inform and consult in good time. Choose or arrange representatives, or consult directly if you qualify, and keep clear records.
5. Exchange employee liability information. The outgoing employer must supply it at least 28 days before the transfer.
6. Don’t harmonise terms by default. Take advice before changing pay, hours or benefits for transferred staff.
7. Take advice before dismissing anyone. Check for an ETO reason and follow a fair process.

What are the risks of failing to comply With TUPE?

TUPE transfers can result in substantial liabilities where employers fail to comply with their legal obligations. Common issues include failing to inform and consult affected employees, making unlawful changes to employment contracts, or dismissing employees because of the transfer itself.

In some circumstances, affected employees may bring claims in the Employment Tribunal. Where there has been a failure to comply with collective information and consultation obligations, a tribunal can award up to 13 weeks’ gross pay per affected employee. Employers acquiring a business may also inherit liabilities connected to transferring employees, making due diligence particularly important before the transaction completes. For transfers completing on or after 1 July 2024, an employer may consult affected employees directly where it has fewer than 50 employees or fewer than 10 employees are transferring, provided the relevant circumstances apply. Otherwise representation rules remain important.

How we can help

If you’re an employer planning a business sale, acquisition or outsourcing exercise, obtaining legal advice early can help avoid costly mistakes.

At Britton and Time, our employment law solicitors regularly advise both employers and employees on TUPE transfers, employment contracts, redundancy issues and workplace restructuring.

If you need advice on a TUPE transfer or your employment rights, get in touch with our employment team today or call 01273 726951