TUPE and Business Transfers

TUPE and Business Transfers

When a business changes hands or when services are outsourced or brought in-house, it’s not just the contracts and assets that are affected—employees are too. The Transfer of Undertakings (Protection of Employment) Regulations, commonly referred to as TUPE, is a vital piece of UK legislation that ensures employees are not disadvantaged by these changes. Whether you are an employer planning a transfer or an employee facing uncertainty, understanding TUPE is essential.

What is TUPE?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations. Its primary function is to safeguard employees’ rights when the business they work for, or the service they provide, is transferred to a new employer.

These regulations ensure that:

● Employees retain their jobs and continuity of employment.

● Employment terms and conditions remain the same.

● Employees are protected from unfair dismissal as a direct result of the transfer

When Does TUPE Apply?

TUPE applies to two main types of scenarios:

1. Business Transfers

This occurs when a business (or part of it) is sold or transferred to a new employer. The identity of the employer must change for TUPE to apply. This includes mergers where two businesses combine to form a new entity.

2. Service Provision Changes

These take place when services are outsourced, transferred between contractors, or brought back in-house. For TUPE to apply, the activities carried out before and after the transfer must be “fundamentally the same”.

Key Protections for Employees

When TUPE applies, employees are granted several vital protections:

● Continuity of employment is preserved. An employee’s start date does not reset.

● Terms and conditions of employment—including pay, holiday entitlement, and other benefits—are maintained.

● Unfair dismissal protection is provided if termination is related solely to the transfer.

● Collective agreements, if applicable, continue to bind the new employer.

Employer Obligations

Before the Transfer

Employers must consult and inform employees or their representatives about:

● The fact and date of the transfer.

● The reasons for the transfer.

● The legal, economic, and social implications of the transfer.

● Any proposed measures the new employer might take.

Failure to meet these obligations can result in a protective award of up to 13 weeks’ pay per affected employee.

Employee Liability Information

The outgoing employer must provide the incoming employer with detailed employee liability information at least 28 days before the transfer, including:

● Terms and conditions of employment.

● Disciplinary and grievance records.

● Claims or potential claims.

Changes to Terms and Conditions

Employers cannot change employees’ terms and conditions solely due to a TUPE transfer. Any post-transfer changes must be based on an economic, technical, or organisational (ETO) reason involving changes to the workforce and must be agreed upon by the employee. Common examples of valid ETO reasons include:

● A change in the business’s location.

● The need to restructure due to financial constraints.

● Reducing headcount following a merger.

Redundancy and TUPE

Employees can be made redundant following a TUPE transfer, but only if there is a genuine ETO reason. Redundancies made solely because of the transfer are automatically considered unfair dismissals. Redundancy rights under TUPE include:

● Fair consultation and selection processes.

● Statutory redundancy pay (if eligible).

● The right to challenge unfair dismissal through an Employment Tribunal.

Pension Rights

Generally, TUPE does not transfer occupational pension rights. However, the new employer must offer a comparable pension scheme. Benefits such as early retirement rights and accrued entitlements are not automatically preserved but must be honoured according to statutory minimums.

Special Considerations

Insolvency

TUPE still applies in some insolvency situations, but the protections may be modified to encourage rescue attempts. For example, the incoming employer may be able to renegotiate terms to save jobs.

Refusing to Transfer

Employees can refuse to transfer, but they will lose the right to claim redundancy or unfair dismissal. This will be treated as a resignation.

Recent Legal Updates

As of 1 July 2024, employers with fewer than 50 employees, or who are transferring fewer than 10 employees, may consult directly with affected staff without needing to elect representatives—an expansion of previous exemptions designed to simplify the process for smaller employers.

Why Legal Advice is Crucial

TUPE is one of the most complex areas of employment law. A misstep in compliance can lead to costly disputes, legal claims, and damaged employee relations. Employers and employees alike should seek legal guidance to:

● Interpret the scope of the regulations.

● Plan and manage the transfer effectively.

● Handle redundancy, restructuring, or contract changes lawfully.

● Protect against employment tribunal claims.

Why Choose The Jonathan Lea Network?

At The Jonathan Lea Network, our expert employment and business solicitors offer end-to-end support through every stage of a TUPE-related transaction.

Our Services Include:

● Advising on whether TUPE applies.

● Drafting and negotiating sale, outsourcing, or acquisition agreements with appropriate warranty and indemnity clauses.

● Managing the consultation process with employees and/or representatives.

● Advising on redundancy, restructuring, and post-transfer strategy.

● Providing practical, tailored advice for buyers, sellers, contractors, and employees.

Contact Us

If you’re involved in a business transfer or facing a TUPE situation, don’t leave compliance to chance. Reach out for a confidential consultation with our experienced team.

👉 Get in touch with our Employment Law team

📞 Call us on 01444 708 640

📧 Email us at wewillhelp@jonathanlea.net

By understanding TUPE and ensuring compliance, you can navigate business transfers confidently and ethically—while protecting jobs, maintaining morale, and reducing the risk of legal complications.