Transfer of Undertakings Protection of Employment (TUPE) Regulations

Who does TUPE apply to?

TUPE, which stands for Transfer of Undertakings (Protection of Employment) Regulations 2006, or the Transfer of Undertakings Protection of Employment Rights bill, is an employment law that applies to employees of businesses in the UK. The size of the business doesn’t matter, and it can even have its headquarters in a different country, but if a part of the business is transferring ownership in the UK, its affected employees are likely protected by TUPE.

TUPE applies when:

• The employees’ jobs transfer over to the new company, which occurs in most cases. There are limited exceptions, such as redundancies, or in some cases where the company becomes insolvent.

• Employees maintain continuity of employment during the transfer and their employment terms and conditions remain the same

Employees can find out if TUPE applies to them by talking to Acas (the Advisory, Conciliation and Arbitration Service) or their trade union representative for legal advice.

What is a TUPE transfer?

The UK’s TUPE regulations define two types of “relevant transfer” when a business changes hands:

• Business takeover: When a business (or part of a business) is transferred from one employer to another

• Service provision change: When the terms of a service the business provides are amended. For example, insourcing or outsourcing, or when a contract ends and is awarded to a new contractor or moved in-house.

In a TUPE transfer, employees are protected. Their contracts of employment, benefits, terms, and conditions are required to go with them to the new employer under the regulation.

Transfers covered by TUPE

TUPE generally applies when:

• A sole trader’s business, limited company, or partnership is sold or transferred

• One company purchases another, as long as they’re buying the business, and not just its assets or shares

• Two companies dissolve and form a new company in a merger

• A contract for goods and services is transferred in circumstances that amount to the transfer of a business

A transfer can be covered by TUPE, but employees may not be protected if they are only contracted for short-term tasks (like cleaning or catering a single event).

Transfers not covered by TUPE

TUPE generally does not apply when:

• The transfer only includes a business’ assets

• The transfer occurs outside the UK

• A contract for goods or services is transferred, and there is no transfer of a business (or part of a business)

• A company’s shares are transferred or sold to new shareholders, but there is no transfer of a business (or part of a business)

TUPE may apply when a business is transferred from the public sector to the private sector, but these cases are particularly complex under the law.

What if an employee doesn’t want to transfer?

Employees can’t be forced to work for the new employer. If they don’t want to transfer, it’s viewed the same as a resignation, and they aren’t eligible to claim unfair dismissal or redundancy pay. No notice is required; the employee simply needs to tell their new employer before the transfer occurs, and their employment will end at the time of the transfer.

The one exception to this process is if the employee’s working conditions will become significantly worse because of the transfer. In that case, they can object to the transfer or resign and claim unfair dismissal.

What is the TUPE process?

The TUPE process can be confusing, and there are a lot of steps for employers to take—and a lot to consider to maintain compliance with the regulations. Here’s a basic outline of the three stages that take place when a TUPE transfer occurs:

Stage 1

Before the transfer even takes place, employers must consult with all trade unions, employee representatives, and anyone else impacted by the proposed transfer. Employers are required to inform them:

• That the transfer is happening, when, and why

• How the transfer will affect them

• Any measures that will take place during the transfer process

Failing to consult with affected employees could result in penalties. Employers should try to come to an agreement with their employees about the transfer before it occurs.

Stage 2

During the transfer, the transferor needs to provide employment information to the transferee, including employees’ personal details and entitlement information.

Here’s what needs to be provided to the new employer for each employee:

• Terms and conditions of employment

• Date of continuous employment

• Age

• Holiday entitlement

• Company sick pay scheme

• Benefits

• Pay details, including when and how they’re paid

• Deductions from wages, including child support, tuition, and any other deductions

• All payments, including overtime, commissions, and bonuses

• Current and previous collective agreements

• Pension scheme and rights

• Any previous disciplinary actions or grievances

The new employer is required by law to accept all transferring employees’ contracts and terms of employment; if they don’t, they’ll be in breach of contract. There are a few exceptions to this, like if the new employer has an “economic, technical or organisational reason” (ETO reason) that involves changes in the workforce or workplace. This might include redundancies or moves from managerial to non-managerial positions, and if the employee agrees to these changes, they can be made after the transfer.

Stage 3

After the transfer, the outgoing employer is required to find out how remaining employees (if any) have been affected by the change. They must:

• Check in with remaining employees on a regular basis

• Address existing employees’ concerns

• Address any changes or drops in work performance

• Consider ways to boost employee morale, if needed

Recent changes to TUPE regulations

In 2024, TUPE regulations in England were updated to allow small businesses to work more directly with employees, rather than representatives, during business transfers.

As of 1 July 2024, organisations that employ fewer than 50 employees and organisations that undergo transfers that involve fewer than 10 employees (regardless of the size of the organisation) do not have to consult with employee representatives if they aren’t already in place. Instead, they can consult directly with their employees during Stage 1 of a TUPE transfer. 

Organisations that don’t meet the above criteria or that already have employee representatives in place will need to continue consulting with representatives before business transfers.

Frequently asked questions about TUPE regulations

What happens if an employer violates TUPE regulations?

If an employer fails to follow TUPE regulations, employees can take the case to an employment tribunal. The tribunal may require the employer to compensate affected employees and, in some cases, reinstate them with their original terms and conditions. Employers found guilty of violating TUPE laws may face significant penalties.

Do employees have to agree to a TUPE transfer?

No, employees do not have to agree to a TUPE transfer. If an employee does not wish to transfer, they can refuse, but this may result in losing their rights to redundancy pay and any claims for unfair dismissal, as it would be considered a voluntary resignation.

Are there any industries where TUPE is more common?

Yes, TUPE is often seen in industries such as facilities management, IT services, and catering, where service provision changes frequently occur. TUPE also applies to mergers and acquisitions in a wide range of sectors across the UK.