Service provision changes are the most common trigger for TUPE transfers in practice — far more frequent than traditional business sales. They occur in the everyday cycle of outsourcing, re-tendering, and insourcing services, and catch many businesses by surprise.
The Three Scenarios
1. Initial Outsourcing
A client contracts out activities to a contractor for the first time. Example: a company outsources its cleaning, IT support, or catering to an external provider. The employees who were doing that work for the client transfer to the contractor.
2. Re-tendering (Contractor to Contractor)
A contract moves from one contractor to another. Example: a security contract is re-tendered and a new security firm wins it. The security guards transfer from the outgoing contractor to the incoming one.
3. Insourcing
A client brings a previously outsourced service back in-house. Example: a company decides to bring its outsourced HR function back in-house. The employees working on that contract for the HR provider transfer to the client company.
Conditions for TUPE to Apply
For a service provision change to trigger TUPE, three conditions must be met:
- Organised grouping of employees — there must be a team of employees whose principal purpose is carrying out the activities being transferred. A single person can constitute an organised grouping.
- Principal purpose — the activities must be the main purpose of the grouping, not incidental or occasional work.
- Activities are fundamentally the same — the activities carried out after the transfer must be fundamentally the same as before (though they do not need to be identical).
Common Sectors
Service provision changes are particularly common in:
- Facilities management (cleaning, security, catering)
- IT services and support
- Construction and maintenance contracts
- Local government contracts
- Healthcare services
What Does Not Trigger a Service Provision Change
- Supply of goods only (without a service element)
- A single specific event or task of short-term duration
- Activities that are wholly or mainly for the supply of goods
Service provision changes require careful management from both sides. Our TUPE guidance service covers all scenarios. Get in touch.