TUPE: practical guidance for HR professionals

It calls for a solid working knowledge of TUPE, the UK framework that protects employees’ jobs and contractual terms when a business (or part of it) changes hands, or when services move between providers (for example, outsourcing, re-tendering or bringing a service back in-house). For HR teams, the challenge is often the same: a tight commercial timetable and a long list of practical questions about who transfers, what liabilities follow, what information must be shared, and what consultation steps are required.

Below are the questions we’re most often asked and the points HR professionals typically need to get right early. 

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as “TUPE”) protect employees when: 

• the business (or part of a business) in which they work is sold; or 

• services move from one provider to another. 

If TUPE applies, affected employees transfer automatically to the new employer (the transferee) from the existing employer (the transferor). Their continuity of employment is preserved and their existing contractual terms transfer with them. 

TUPE most commonly applies where there is either: 

• a business transfer (the transfer of an economic entity that retains its identity), for example a sale of a business or part of a business as a going concern; or 

• a service provision change (SPC), typically where a service is outsourced, re-tendered to a new provider, or brought back in-house. 

TUPE does not usually apply where only the shares of a company are sold and employees remain employed by the same company. 

Whether an economic entity retains its identity is fact-sensitive. Indicators often include: 

• how similar the activities are before and after the transfer; 

• whether customers and staff move across; 

• whether assets, premises, intellectual property or goodwill transfer; and 

• the overall degree of continuity in the operation. 

The weighting of these factors depends on the nature of the business. 

An SPC analysis often turns on whether: 

• the activities carried out after the change of provider are fundamentally the same as before; and 

• there is an organised grouping of employees in Great Britain whose principal purpose is carrying out the relevant activities for the client. 

TUPE is less likely to apply where the arrangement is genuinely short-term or one-off, or where the contract is mainly for the supply of goods rather than services. 

Employees will transfer if they are wholly or mainly assigned to: 

• the transferring undertaking (for a business transfer), or 

• the organised grouping (for an SPC). 

Assignment is assessed using a range of indicators (not just a simple percentage of time), including how work is organised, role purpose, team structure, cost allocation and actual deployment. Where individuals are split across multiple activities, the analysis can be complex so it is sensible to take advice early. 

TUPE is primarily concerned with employees, but status issues can arise in practice (for example, where individuals are engaged on atypical terms). If the affected group includes non-standard arrangements, it may take careful analysis to confirm whether those individuals are in scope to transfer. 

Broadly: 

• contracts of employment transfer automatically on existing terms (subject to limited exceptions); 

• continuity of employment is preserved; and 

• rights, powers, duties and liabilities under or in connection with those contracts transfer to the transferee. 

Pensions: occupational pension rights do not transfer in the same way as other contractual benefits, but minimum pension obligations can arise for transferees. Identify pension issues early and involve specialists where needed. 

An employee can object to transferring. If they do, their employment will usually end at the transfer date and they will not be treated as dismissed (so redundancy pay and unfair dismissal rights will not typically arise). 

Employees may have remedies in limited scenarios, for example, where working conditions become substantially worse after the transfer to their material detriment.  Handle communications carefully where objections are likely. 

The default position is restrictive: contractual changes are void if the sole or principal reason is the transfer itself, even if the employee agrees. 

Limited exceptions may apply where, for example: 

• there is a genuine ETO reason (economic, technical or organisational) entailing changes in the workforce, and the change is agreed; or 

• the change is genuinely unconnected with the transfer. 

A common pitfall is attempted “harmonisation” after a transfer (changing terms simply to align staff). Where the change is transfer-related, it is often ineffective. 

Collective agreement terms can sometimes be renegotiated after one year, provided the overall position is no less favourable. 

An ETO reason is an economic, technical or organisational reason entailing changes in the workforce. It matters because it can: 

• provide a basis to defend a transfer-related dismissal from being automatically unfair (subject to overall fairness and process); and 

• support certain limited post-transfer contractual changes (subject to strict conditions). 

A “change in the workforce” can include changes to job functions, numbers and (in appropriate cases) location. 

If the sole or principal reason for a dismissal is the transfer, it is treated as automatically unfair unless the employer can show an ETO reason entailing changes in the workforce. 

Even where automatic unfairness is avoided, a dismissal can still be unfair if the employer does not follow a fair process or cannot justify the decision on the facts. 

Employers must inform and, where relevant, consult with appropriate representatives (or a recognised trade union) of affected employees. “Affected” employees can include those who will not transfer if they are impacted by measures connected with the transfer. 

The information provided must cover: 

• the fact that the transfer is happening; 

• the timing and reasons for it; 

• the legal, economic and social implications for affected employees; and 

• prescribed information about the use of agency workers. 

If either the transferor or the transferee envisages any measures in connection with the transfer, that must be explained as well and it will trigger consultation with a view to seeking agreement about those measures. 

“Measures” usually refers to post-transfer changes, such as proposed redundancies, changes in work location, or changes to pay dates. 

There is no fixed statutory lead-in period for TUPE information and consultation. Employers must allow enough time for the process to be meaningful before the transfer. 

Normally, information and consultation is conducted via appropriate representatives (a recognised trade union or elected employee representatives). 

However, direct information/consultation with affected employees may be permitted where there are no appropriate representatives in place and either: 

• the employer has fewer than 50 employees in total; or 

• fewer than 10 employees are transferring (regardless of the employer’s overall size). 

If representatives are going to be required, you should plan early for them to be put in place (for example, by running an election). 

The transferor must provide the transferee with employee liability information (ELI) at least 28 days before the transfer (or as soon as reasonably practicable if that is not possible). 

ELI typically includes: 

• the identity and age of transferring employees; 

• the main particulars of their employment (including key terms and conditions); 

• information about any collective agreements; 

• details of disciplinary action taken and any grievances raised in the previous two years; 

• details of any legal action taken by employees against the transferor in the previous two years; and 

• details of any legal action the transferor reasonably believes may be brought by those employees. 

Failure to provide ELI can lead to claims for compensation which can be at least £500 per employee (unless a tribunal considers it just and equitable to award a lower sum for a trivial or unwitting breach).

Where an independent trade union is recognised in respect of the transferring employees, recognition can transfer to the transferee in relation to those employees. In practice, this can depend on whether the transferred group retains a distinct identity within the transferee’s organisation after the transfer. 

Collective arrangements can be sensitive and should be identified early (including any collectively agreed terms that may continue to apply). 

TUPE can still apply in insolvency, but special “rescue” rules may apply in certain insolvency proceedings aimed at rescuing the business. In appropriate cases, there may be scope (with representative agreement) to vary terms to safeguard employment and business survival, and some liabilities may be treated differently. 

The position is highly fact-specific and depends on the type and purpose of the insolvency process, so early specialist advice is usually essential. 

If an employer fails to comply with TUPE information and consultation duties, an employment tribunal can make a protective award. The maximum award is 13 weeks’ actual pay per affected employee. Liability can fall on the transferor, the transferee, or both, depending on the circumstances. 

Commercial agreements often allocate risk via indemnities, but that does not remove the need to get the process right on the ground. 

Most TUPE transfers turn on a small number of high impact decisions: who is in scope, what liabilities sit with whom, and whether any measures are planned. If any of those points are unclear or the consequences are significant, early legal advice can help you avoid taking steps that are difficult to unwind later.