TUPE Transfers: A Complete UK Guide

TUPE — the Transfer of Undertakings (Protection of Employment) Regulations 2006 — protects employees when the business they work for, or the service they provide, is transferred to a new employer. The central principle is simple but powerful: affected employees transfer automatically to the new employer on their existing terms and conditions, with their continuity of employment preserved as if nothing had changed. The new employer inherits their contracts, rights and most liabilities. Dismissing an employee because of the transfer is automatically unfair, and changing their terms because of it is generally void. Both the old and new employers must also inform and — where appropriate — consult about the transfer. This guide explains, for employers and employees, when TUPE applies, what it protects, the rules on dismissals and changing terms, and the information and consultation obligations, including the 2024 simplification for smaller transfers.

What TUPE is

TUPE is shorthand for the Transfer of Undertakings (Protection of Employment) Regulations 2006. They apply to two situations: a business transfer, where a business or part of it changes hands as a going concern, and a service provision change, where work is outsourced, brought back in-house, or moved between contractors.

TUPE exists to protect employees from losing their jobs or having their terms cut simply because the business or service they work in changes hands. Without it, a buyer of a business, or a new contractor taking over a service, could in principle dismiss the existing workforce or impose worse terms. TUPE prevents that by treating the employees as automatically moving across to the new employer on the same terms, as if their employment had never been interrupted. It applies to a wide range of situations — company sales, mergers, outsourcing, insourcing and re-tendering of contracts — and it imposes real obligations on both the old employer (the transferor) and the new one (the transferee). For employees, TUPE is a significant protection; for businesses, it is a key consideration in any deal or change of supplier.

When TUPE applies

TUPE applies in two main situations:

The “service provision change” category is wide and catches many everyday situations — cleaning, catering, IT, security and facilities contracts changing hands all commonly trigger TUPE. Whether TUPE applies in a particular case can be a technical question, turning on whether there is an “organised grouping of employees” principally assigned to the service. Getting this assessment right at the outset is important, because the obligations that follow are significant.

The automatic transfer

The core protection is the automatic transfer principle in regulation 4: affected employees move to the new employer automatically, on their existing terms and with their continuity of service and accrued rights intact. The new employer cannot simply re-engage them on worse terms, and a variation is void if its sole or principal reason is the transfer, unless there is an economic, technical or organisational (ETO) reason entailing changes in the workforce.

The defining effect of TUPE is the automatic transfer. When a relevant transfer happens, the employees assigned to the business or service automatically become employees of the new employer, on the same terms and conditions they had before, and with their continuity of employment preserved. They do not have to agree to it, and they do not get a new contract on new terms — their existing contract simply continues with a new employer. This means their length of service, pay, holiday entitlement, notice rights and other terms all carry over. The new employer cannot treat them as new starters or reset their rights. This automatic, seamless continuation is the heart of TUPE and the reason it is so protective.

What transfers to the new employer

It is not just the employees who transfer — so do their rights and most liabilities. The new employer inherits the existing employment contracts in full, along with most accrued rights and liabilities connected to them: outstanding wages and holiday, continuity of service, and even certain liabilities for things that happened before the transfer, such as an existing discrimination or unfair dismissal claim. Collective agreements with recognised unions can also transfer. The main exceptions are certain occupational pension rights, which have special treatment, and criminal liabilities. Because the new employer takes on these liabilities, due diligence before a transfer is essential — a buyer or incoming contractor needs to understand exactly what employment liabilities it is inheriting, which is why employee liability information (covered below) matters so much.

Dismissals and TUPE

TUPE gives strong protection against transfer-related dismissals. A dismissal is automatically unfair if the sole or principal reason for it is the transfer itself. This applies whether the dismissal is by the old or the new employer, and whether it happens before or after the transfer. There is one important exception: a dismissal may be fair if the reason is an economic, technical or organisational (ETO) reason entailing changes in the workforce — for example, a genuine redundancy arising from the new employer’s reorganisation. Even then, the dismissal must be handled fairly, following a proper procedure. The key point is that an employer cannot use a transfer as a reason or cover to remove employees; doing so is automatically unfair, and the liability for such a dismissal can pass to the new employer. Both sides should understand that transfer-connected dismissals carry real risk.

Changing terms after a transfer

Just as employees are protected from dismissal, their terms are protected from being changed because of the transfer. A change to an employee’s contract is void if the sole or principal reason for it is the transfer — even if the employee agrees to it. This catches the common temptation for a new employer to “harmonise” the transferred employees’ terms with its existing workforce: such harmonisation, if driven by the transfer, is generally not permitted. Again, there is a limited ETO exception, and changes genuinely unconnected to the transfer (or those that are positive for the employee) may be possible. This is one of the most misunderstood parts of TUPE: a new employer cannot simply bring the transferred staff onto its standard terms. Changing terms after a TUPE transfer is a legal minefield that needs careful handling and advice.

Information and consultation

Both employers must inform and, where measures are envisaged, consult appropriate representatives of affected employees under regulation 13. There is no fixed minimum period, but it must happen long enough before the transfer to be meaningful. A failure can lead to a protective award of up to 13 weeks’ uncapped gross pay for each affected employee — one of the most common and expensive TUPE mistakes.

Both employers have duties to inform and consult about the transfer. The transferor and transferee must inform appropriate representatives (a recognised union or elected employee representatives) of affected employees about the fact of the transfer, when and why it is happening, the legal, economic and social implications, and any “measures” they envisage taking. Where measures are envisaged, there must also be genuine consultation. Importantly, a 2024 simplification now allows employers to consult directly with employees, without electing representatives, where the business has fewer than 50 employees, or where fewer than 10 employees are transferring (and there are no existing representatives). This makes the process much simpler for smaller transfers. Whatever the route, the information and consultation must be genuine and in good time before the transfer.

Employee liability information

The outgoing employer must give the incoming employer specified “employee liability information” — including identities, ages, terms, and recent disciplinary, grievance and claims history — at least 28 days before the transfer under regulation 11. Late or incomplete information leaves the new employer exposed and is itself a breach the tribunal can compensate.

To allow the new employer to understand who and what it is taking on, the old employer must provide employee liability information (ELI) in writing, at least 28 days before the transfer. This includes the identity and age of the transferring employees, the particulars of their employment terms, information about any disciplinary or grievance proceedings and any legal claims in the previous two years, and details of any collective agreements. ELI is crucial because the new employer inherits the employees’ liabilities, so it needs to know what those are. Failing to provide accurate ELI can lead to a compensation award against the old employer. For the incoming employer, ELI — alongside its own due diligence — is the key to understanding the employment risks it is acquiring.

The protective award

The duty to inform and consult has real teeth. If an employer fails to comply with its information and consultation obligations, an employment tribunal can make a protective award of up to 13 weeks’ pay per affected employee. With even a modest number of employees, that can add up to a very significant sum, which is why getting the information and consultation process right is so important. Both the transferor and transferee can be liable, and the new employer can find itself responsible for the old employer’s failures. The protective award is a powerful incentive to take the consultation obligations seriously, plan the process in good time, and document compliance — rather than treating information and consultation as an afterthought once the deal is done.

The employee’s right to object

An employee cannot be forced to work for the new employer against their will, but the consequences of objecting are significant. An employee can object to transferring, but if they do, their employment generally simply ends on the transfer — they are not treated as dismissed, so they usually have no claim for unfair dismissal or redundancy. The exception is where the transfer would involve a substantial change to their working conditions to their material detriment, in which case the employee may be able to treat themselves as dismissed and claim. Objecting is therefore a serious step that an employee should take advice on, because in most cases it simply ends their employment without compensation. Understanding this rule is important for any employee who does not wish to move to the new employer.

Who actually transfers? The “assignment” question

One of the most litigated questions in TUPE is exactly which employees transfer. Only those who are part of an “organised grouping of employees” principally assigned to the business or service being transferred move across. That sounds simple, but it is often anything but: employees who split their time across several contracts, those who happen to be temporarily working elsewhere, and those whose roles only partly relate to the transferring service can all raise difficult assignment questions. A worker who spends most of their time on the transferring contract is likely assigned to it and transfers; one who spends only a small proportion of their time on it may not. Getting the assignment analysis right matters enormously, because it determines who the new employer inherits and who stays behind — and disputes about it are common where a contract changes hands. Both the outgoing and incoming employers, and the employees themselves, need to be clear about who is in scope, which is why careful analysis (and accurate employee liability information) is so important.

TUPE and the wider transaction

TUPE rarely sits in isolation — it is usually one part of a larger transaction or change, and it interacts with the commercial terms of the deal. In a business sale or outsourcing, the parties typically allocate TUPE risk between them through indemnities and warranties in the sale or service contract: for example, the buyer or incoming contractor may seek protection against undisclosed employment liabilities, and the seller or outgoing contractor against the cost of the other side’s failures to consult. The timing of information and consultation has to be fitted around the deal timetable, and the treatment of employees can affect the price. For these reasons, the employment and TUPE aspects should be considered alongside the commercial negotiation, not bolted on at the end. A transaction that ignores TUPE until completion risks both legal liability and commercial disputes between the parties about who bears the cost. Bringing the TUPE analysis into the deal early protects everyone involved.

Worked example

A company outsources its cleaning to a contractor, then a few years later re-tenders the contract and a new contractor wins it. The cleaning staff who are principally assigned to that contract are protected by TUPE as a service provision change: they automatically transfer to the new contractor on their existing terms, with their continuity of service preserved. The new contractor cannot dismiss them or cut their terms because of the transfer, and must honour their existing contracts. Before the transfer, the outgoing contractor must provide employee liability information and both contractors must inform and consult the affected staff. If the new contractor later needs fewer staff for a genuine business reason, any redundancies must be handled fairly as an ETO situation. The example shows how TUPE protects employees through a change of contractor that they had no part in choosing.

Pensions and TUPE

Pensions are treated specially under TUPE, and it is a frequent area of confusion. As a general rule, rights under an occupational pension scheme relating to old-age, invalidity or survivors’ benefits do not transfer under TUPE in the same way as other terms. However, this does not mean transferring employees lose pension provision: the new employer is required to provide a minimum level of pension for employees who were, or were eligible to be, members of an occupational pension scheme before the transfer — broadly, either matching contributions up to a set level or an equivalent arrangement, alongside automatic-enrolment duties. Other pension-related contractual rights may transfer in the normal way. Because the rules are technical and the value involved can be significant, pensions are an area where both employers and employees should take specific advice on a TUPE transfer, rather than assuming the position. Getting the pension treatment wrong is a common and costly TUPE mistake.

Redundancies and TUPE

Redundancies and TUPE often arise together, because a transfer can lead a new employer to need fewer staff. The key principle is that a redundancy cannot be used as a disguised way to dismiss employees because of the transfer — that would be automatically unfair. But a genuine redundancy arising from the new employer’s own reorganisation can be a fair ETO reason, provided it is handled properly: a real redundancy situation, fair selection, proper consultation and consideration of alternatives, exactly as in any redundancy. Where 20 or more redundancies are proposed, the collective consultation rules also apply, and consultation can in some circumstances begin before the transfer. The interaction between TUPE and redundancy is complex, and getting it wrong exposes the employer to both unfair dismissal and protective-award claims. Our guide to redundancy explains the redundancy process that must still be followed in a TUPE context.

TUPE in business sales: asset versus share sales

Whether TUPE applies in a corporate transaction depends on how the deal is structured. In an asset sale (or business sale), where the buyer acquires the business and its assets, TUPE typically applies and the employees transfer to the buyer. In a share sale, by contrast, the company itself is bought — the employer does not change, only its ownership does — so TUPE is not triggered, and the employees stay employed by the same company on the same terms. This distinction has major practical consequences for due diligence, consultation and liability, and it often influences how a deal is structured. For a buyer, understanding whether TUPE applies — and conducting thorough employment due diligence either way — is essential, because the employment liabilities being acquired differ significantly between the two. Anyone buying or selling a business should consider the TUPE position early, as it affects timing, process and risk.

A TUPE checklist for employers

On any potential TUPE transfer, work through:

• Assess whether TUPE applies — a business transfer or service provision change.
• Identify the affected employees principally assigned to the business or service.
• Carry out employment due diligence and exchange employee liability information at least 28 days before.
• Plan information and consultation in good time — directly with employees if the small-transfer or small-business rules apply.
• Avoid transfer-connected dismissals or changes, which are automatically unfair or void.
• Handle any genuine redundancies as a properly managed ETO situation.
• Address pensions and the new employer’s minimum pension obligations.
• Document everything to manage the risk of a protective award.

A planned, well-advised TUPE process protects both employers and employees and avoids the significant liabilities that flow from getting it wrong.

What we see in practice

In our advisory work, the most expensive TUPE problems are usually consultation failures discovered too late, because the protective award is uncapped and applies to every affected employee. The most common pattern we see is a transferor and transferee each assuming the other will inform and consult, so neither does it properly. We also see disputes over who is “assigned” to the transferring service, and post-transfer harmonisation of terms that is void because the real reason is the transfer rather than a genuine ETO reason. Mapping the affected population and the consultation timetable at the very start of a deal prevents almost all of this.

Common mistakes to avoid

• Employers: assuming TUPE does not apply. Service provision changes catch many outsourcing and re-tendering situations.
• Employers: harmonising terms after a transfer. Changes because of the transfer are generally void.
• Employers: skipping information and consultation. This risks a protective award of up to 13 weeks’ pay each.
• Employers: poor due diligence and ELI. The new employer inherits the liabilities, so it must know them.
• Employees: objecting without advice. Objecting usually just ends your employment with no claim.
• Both: ignoring transfer-connected dismissals. They are automatically unfair without an ETO reason.

London employers and employees: a quick note

TUPE applies across Great Britain, but London’s large outsourced-services economy — facilities, cleaning, catering, security, IT and professional services — means service provision changes, and therefore TUPE, arise constantly as contracts are tendered and re-tendered. London’s frequent corporate transactions also trigger business transfers. For London employers on either side of a transfer, the priorities are correctly assessing whether TUPE applies, carrying out proper due diligence and ELI, and running genuine information and consultation; for employees, it is understanding that their terms and continuity are protected and that transfer-related dismissals are automatically unfair.

How Hayhills can help

Advising on TUPE is an employment and commercial matter, not a reserved legal activity, so Hayhills can help you directly. For employers and businesses, we help you assess whether TUPE applies, carry out employment due diligence, handle employee liability information, run a compliant information and consultation process, and manage the transfer and any consequent reorganisation — on either side of a sale or outsourcing. For employees, we help you understand your rights on a transfer, including protection of your terms and continuity and the consequences of objecting. Where a matter reaches the employment tribunal, which is a regulated activity, we work alongside and introduce a regulated litigator. Explore our employment advisory service or speak to Hayhills today.

This article is for general information only and does not constitute legal or accountancy advice. Hayhills Limited, trading as Hayhills Legal Advisory, provides non-reserved legal advisory services. Always check current requirements at GOV.UK.

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