TUPE Transfers Explained: Employer Obligations and Employee Rights

The Transfer of Undertakings (Protection of Employment) Regulations 2006 — universally known as TUPE — protect employees when a business or service transfers from one employer to another. Whether you're buying a business, outsourcing a function, or taking over a contract, TUPE likely applies. And failing to comply can be expensive.

When Does TUPE Apply?

TUPE applies in two main scenarios:

• Business transfers — When a business or part of a business transfers from one owner to another as a going concern. This includes mergers, acquisitions, and sales of business units.
• Service provision changes — When a service is outsourced to a new provider, brought back in-house, or re-tendered to a different contractor. This is the most common trigger in practice and catches many employers off guard.

What Transfers with the Employees

When TUPE applies, affected employees automatically transfer to the new employer on their existing terms and conditions. This includes:

• Continuity of employment (service dates are preserved)
• Pay, benefits, and working hours
• Contractual and non-contractual terms
• Accrued holiday entitlement
• Collective agreements

The only significant exception is occupational pension rights, which are subject to separate provisions.

Employer Obligations

Information and Consultation

Both the outgoing employer (transferor) and the incoming employer (transferee) have duties to inform and consult affected employees or their representatives. The transferor must provide the transferee with Employee Liability Information (ELI) at least 28 days before the transfer, covering employee details, terms, disciplinary actions, and any claims.

Protection Against Dismissal

Dismissing an employee because of the transfer is automatically unfair unless there is an economic, technical, or organisational (ETO) reason entailing changes in the workforce. Even with an ETO reason, you must still follow a fair process.

Changing Terms and Conditions

You cannot change employees' terms and conditions if the sole or principal reason is the transfer itself. Changes are only permissible where there is an ETO reason or where the terms are varied by mutual agreement for reasons unconnected to the transfer.

Common Scenarios

TUPE arises more often than many employers realise. Common examples include:

• Outsourcing cleaning, catering, or IT services to a third party
• Winning a new contract previously held by another provider
• Bringing an outsourced function back in-house
• Acquiring a business as part of a merger or restructure

Risks of Non-Compliance

Failing to inform and consult properly can result in awards of up to 13 weeks' pay per affected employee. Unfair dismissals connected to a transfer carry the standard compensatory awards. Additionally, the new employer inherits any pre-transfer liabilities — meaning claims arising from the previous employer's failures transfer too.

TUPE is complex, but with the right guidance it is manageable. Our TUPE guidance service ensures both transferors and transferees meet their obligations and avoid unnecessary exposure. Contact us for support with your next transfer.