One of the most important TUPE protections is that employees' terms and conditions transfer intact. The new employer cannot change these terms simply because a transfer has taken place — any variation that is solely or principally because of the transfer is void, even if the employee agrees to it.
When Changes Are Void
Under Regulation 4(4) of TUPE, any purported variation of a contract is void if:
- The sole or principal reason for the variation is the transfer itself, or
- The reason is connected to the transfer and is not an ETO reason entailing changes in the workforce
This means that even if the employee signs a new contract with different terms, they can later claim the original terms still apply.
When Changes May Be Permitted
ETO Reason
Changes are permitted where there is an "economic, technical, or organisational reason entailing changes in the workforce." This typically means changes to the number or functions of employees — for example, a genuine reorganisation that changes job roles.
Unconnected to the Transfer
If the reason for the change is wholly unconnected to the transfer, the normal rules for varying contracts apply. For example, a company-wide pay review that was planned before the transfer and applies to all employees (not just transferred ones) may be defensible.
Collective Agreement Terms
Where terms derive from a collective agreement, changes negotiated through a new collective agreement may be permissible after one year, provided the overall package is no less favourable.
Harmonisation
New employers often want to harmonise transferred employees' terms with their existing workforce. This is understandable but legally fraught. Harmonisation connected to the transfer is void — even years after the transfer if the connection can be established. In practice, employers typically:
- Wait a significant period (often 12+ months) before proposing changes
- Ensure changes are part of a wider business reorganisation with a genuine ETO reason
- Consult fully with affected employees
- Ensure the overall package is no less favourable or offer compensation for any detriment
Changing terms after a TUPE transfer is one of the riskiest areas of employment law. Our TUPE specialists can advise on what is and isn't permissible. Get advice.