TUPE Transfers: What Employers Need to Know

TUPE transfers can be complex, but getting them wrong is expensive. Understanding your obligations helps protect both the business and employees.

What is TUPE?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 protect employees when:

• A business or part of a business changes owner
• A service provision changes (outsourcing, insourcing, retendering)

Key principle: Employees transfer automatically to the new employer with their existing terms and conditions preserved.

When Does TUPE Apply?

Business Transfers

A "relevant transfer" occurs when there is a transfer of an economic entity that retains its identity:

• Sale of a business as a going concern
• Merger of two businesses
• Transfer of part of a business
• Franchise transfers

Service Provision Changes

TUPE also applies when:

• Services are outsourced (client to contractor)
• Services are brought in-house (contractor to client)
• Services are retendered (contractor A to contractor B)

Requirements:

• Organised grouping of employees
• Principal purpose is to carry out activities for client
• Activities don't consist wholly of supply of goods

Who Transfers?

Automatically Transferring

• All employees assigned to the transferring undertaking
• Employees on maternity leave, sick leave, etc.
• Fixed-term and part-time employees

Who Doesn't Transfer

• Employees not assigned to the transferring business
• Self-employed contractors (though check their status)
• Agency workers (employed by agency)

Assigning Employees

Consider:

• Where they spend most of their time
• Who manages them
• What work they mainly do
• Their contract terms

Employees can be assigned to more than one part of a business.

What Transfers?

Employment Terms

All terms and conditions transfer:

• Salary and pay arrangements
• Working hours
• Holiday entitlement
• Pension rights (with exceptions)
• Contractual benefits
• Accrued service
• Collective agreements

What Doesn't Transfer

• Occupational pension schemes (special rules)
• Criminal liabilities
• Some employee shareholder rights

Information and Consultation

The Transferor's Duty (Old Employer)

Must inform and consult affected employee representatives about:

1. The fact of the transfer
2. When it will take place
3. Reasons for the transfer
4. Legal, economic, and social implications
5. Measures envisaged (or confirm no measures)

The Transferee's Duty (New Employer)

Must inform the transferor of any measures they plan to take:

• Changes to work location
• Restructuring plans
• Changes to reporting lines
• Any other changes affecting employees

Who to Consult

• Recognised trade union representatives, OR
• Elected employee representatives
• If neither exists, must arrange election

Timing

• Long enough before transfer to enable meaningful consultation
• No fixed minimum period (unlike collective redundancy)
• Typically 2-4 weeks minimum for straightforward transfers

Failure to Inform and Consult

Employees can claim up to 13 weeks' pay each if you fail to properly inform and consult.

Employee Liability Information (ELI)

The transferor must provide the transferee with written information about transferring employees:

Information Required	Details
Identity	Names, ages
Employment particulars	Terms from written statement
Disciplinary/grievance	Action in past 2 years
Legal claims	Actual or potential claims
Collective agreements	That will apply after transfer

Deadline: At least 28 days before transfer (or as soon as reasonably practicable).

Penalty for failure: Minimum £500 per employee compensation.

Dismissals and TUPE

Automatically Unfair Dismissals

A dismissal is automatically unfair if the sole or principal reason is the transfer itself.

This applies to:

• Pre-transfer dismissals by the old employer
• Post-transfer dismissals by the new employer

ETO Reasons

A dismissal may be fair if there is an "Economic, Technical or Organisational" reason entailing changes in the workforce:

• Economic - business reasons (e.g., cost reduction)
• Technical - new equipment, technology
• Organisational - restructuring, location changes

But you must still:

• Follow fair procedure
• Show it's a genuine ETO reason
• Consider alternatives

Redundancy and TUPE

Redundancy can be a fair ETO reason, but:

• Must be genuine redundancy situation
• Follow proper redundancy procedure
• Consult appropriately
• Consider suitable alternative employment

Changing Terms After TUPE

The General Rule

Changes to employment terms are void if the transfer is the sole or principal reason.

Permitted Changes

Changes may be valid if:

1. Unconnected to the transfer - Would have happened anyway
2. ETO reason - Involving changes in the workforce
3. Harmonisation - Only after a significant period and with consent

Practical Approach

• Don't change terms immediately after transfer
• Ensure any changes have genuine business reasons
• Document why changes are unconnected to transfer
• Always seek employee agreement
• Take legal advice on significant changes

Due Diligence

What to Check

Before a TUPE transfer, investigate:

• Number and identity of transferring employees
• Employment terms and conditions
• Outstanding claims or grievances
• Pending disciplinary matters
• Pension arrangements
• Union recognition
• Custom and practice

Warranties and Indemnities

Commercial agreements should include:

• Warranties about employee information accuracy
• Indemnities for pre-transfer liabilities
• Provisions for ELI failures
• Apportionment of redundancy costs

Common TUPE Mistakes

1. Assuming TUPE Doesn't Apply

When in doubt, assume it does. The consequences of getting it wrong are severe.

2. Failing to Consult

Even if there are "no measures," you must still inform employees.

3. Dismissing to Avoid Transfer

Pre-transfer dismissals to reduce headcount are automatically unfair.

4. Immediate Term Changes

Changing terms straight after transfer is almost always void.

5. Ignoring Collective Agreements

These transfer too and remain binding.

6. Missing ELI Deadlines

Late or incomplete information creates liability.

Objecting to Transfer

Employees can object to transferring:

• Must inform old or new employer before transfer
• Employment ends on transfer date
• No dismissal (so no unfair dismissal claim)
• No entitlement to redundancy pay
• No right to notice pay

Advise employees carefully - objecting usually loses them all rights.

Checklist for Transferees

1. Identify if TUPE applies
2. Request Employee Liability Information
3. Verify information received
4. Plan for transferred employees
5. Inform transferor of any measures
6. Arrange consultation with representatives
7. Communicate with affected employees
8. Prepare for transfer day logistics
9. Update payroll and HR systems
10. Monitor for post-transfer issues