TUPE Explained: A Guide for Employers and Employees

When a business is sold, restructured, or a contract moves to a new provider, TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006, is usually the law that decides what happens next for the people who work there. It matters just as much to the employees whose jobs may be affected as it does to the businesses on either side of the deal. This guide looks at TUPE from both sides, so employers can manage transfers properly and employees can understand exactly where they stand.

What Is TUPE and Why Does It Exist?

TUPE protects employees when the business they work for changes hands, or when the contract for a service they deliver switches to a new provider. The underlying principle is straightforward: employees should not lose their job, their pay and conditions, or their length of service purely because of a decision made above their heads, by owners or clients, that they had no part in.

For employers, this means a transfer is not a clean slate, you generally inherit the workforce, and their existing terms, along with the business or contract itself. For employees, it means a change of employer does not automatically mean a fresh start with reduced rights; in most respects, your employment simply continues as before, just with someone new signing the pay cheque.

When Does TUPE Apply?

TUPE is triggered by a “relevant transfer”, which covers two main situations:

• Business transfers, a business, or a clearly identifiable part of one, changes ownership and carries on operating in essentially the same form.

• Service provision changes, a contract moves from one contractor to another, or work is brought back in house, and the activities carried out afterwards remain essentially the same.

A share sale (simply buying the shares in a company) does not itself trigger TUPE, because the employing company does not change, only its ownership does.

For employers:

Getting this assessment right early is essential, due diligence, pricing, and staffing plans all depend on knowing whether you're inheriting a workforce or not.

For employees:

If your employer sells the business, changes contractor, or brings a service in house, ask early whether TUPE is expected to apply. This affects whether you're entitled to transfer automatically, and on what terms.

What Happens to Your Contract on a Transfer?

Where TUPE applies, affected employees' contracts transfer automatically to the new employer, on their existing terms, as though they had always worked for that employer. The new employer takes on the previous employer's rights and responsibilities relating to those employees, including things that happened before the transfer.

Pension rights relating to old age, invalidity, and survivor benefits are a notable exception and are not automatically preserved in the same way, separate, more limited protections apply instead.

For employers:

You cannot pick and choose which transferring staff to take on, or offer them new contracts on worse terms as a condition of the transfer. Historic liabilities relating to those employees generally transfer with them.

For employees:

You do not need to sign a new contract for the transfer to take effect, it happens automatically by law. If you do not want to transfer, you can object, but this ends your employment rather than keeping you with your original employer (see below).

Can an Employee Refuse to Transfer?

Yes. An employee can object to being transferred, but objecting does not mean staying with the old employer instead. Legally, their employment simply ends on the transfer date, without being treated as a dismissal.

For employers:

An employee who objects is not your responsibility to redeploy or dismiss, their contract ends automatically. Document objections clearly to avoid later disputes about whether someone genuinely refused to transfer.

For employees:

Think carefully before objecting: because it is not treated as a dismissal, you typically will not be entitled to redundancy pay or other dismissal related compensation as a result. Take advice if you are unhappy about a transfer rather than assuming objecting is a safe way to stay put.

Can Terms and Conditions Be Changed After a Transfer?

New employers often want to bring transferred staff onto standard company terms, but TUPE limits this significantly. A change is generally void if the transfer itself is the main reason for it, unless:

• There is a genuine economic, technical or organisational reason involving real changes to the workforce (an “ETO reason”), or

• The existing contract already permits that particular change.

For employers:

Resist the temptation to harmonise terms quickly for administrative convenience, this is one of the most common ways employers expose themselves to claims after a transfer. Dismissal and re engagement to force through changes carries particularly high legal risk.

For employees:

If your new employer changes your pay, hours, or other core terms shortly after a transfer and cites the transfer as the reason, that change may not be enforceable. It is worth checking before simply accepting a variation.

Protection Against Dismissal

TUPE gives extra protection beyond ordinary unfair dismissal law. A dismissal is automatically unfair if the transfer itself is the sole or main reason. A dismissal for a genuine ETO reason involving workforce changes, such as a real redundancy situation, may still be fair, provided normal fair process is followed.

Resigning in response to a fundamental breach of contract, or a substantial detrimental change to working conditions, can count as a dismissal for these purposes even though the employee technically resigned.

For employers:

Redundancies genuinely unrelated to the transfer can still go ahead, but the reasoning needs to be real and well evidenced, not a label attached to what is actually transfer related restructuring.

For employees:

If you are dismissed around the time of a transfer, or feel forced to resign because of major changes to your role, get advice quickly, TUPE dismissal protection is stronger than standard unfair dismissal law, but time limits still apply.

Duties to Inform and Consult

Both the outgoing and incoming employer must inform appropriate representatives, a recognised trade union, or elected employee representatives, about any of their own employees who may be affected. Consultation is required in addition wherever either employer plans to take steps (“measures”) affecting those employees, such as restructuring or relocation.

Failure to properly inform or consult can lead to compensation of up to 13 weeks' pay per affected employee, and both employers can potentially be held jointly liable.

For employers:

Build consultation timelines into the transaction plan from day one, this is not something that can be compressed into the final weeks before completion without real risk.

For employees:

You are entitled to be informed, and in many cases consulted, about a transfer that affects you, even if you are not personally moving employer. If this has not happened, that is worth raising, ideally through your union or employee representatives.

Employee Liability Information

Before a transfer, the outgoing employer must give the incoming employer certain information about each transferring employee, including terms of employment, disciplinary and grievance history, and details of any live claims, with enough notice to prepare.

For employers:

If you are the incoming employer and this information does not arrive in good time, you can bring a tribunal claim, with a guaranteed minimum award per affected employee even without proof of financial loss.

For employees:

This exchange of information happens between employers, not with you directly, but it can affect how smoothly your transfer is handled, including whether your new employer is aware of ongoing issues like a grievance you have raised.

Insolvent Businesses

Where the outgoing employer is insolvent, some TUPE protections are relaxed to make it easier to rescue all or part of a failing business, with the extent of relaxation depending on the type of insolvency proceedings involved.

For employers:

Buying out of an insolvency can reduce inherited liabilities compared with a standard transfer, but the rules are technical and vary by insolvency type, specialist advice is essential.

For employees:

If your employer becomes insolvent, TUPE may still offer some protection if the business or your role is bought by someone else, though the protections are narrower than in a standard sale.

What If TUPE Does Not Apply?

If a business changes hands but TUPE genuinely does not apply, employment does not transfer automatically, the employee's agreement is needed. Where they do agree and the new employer takes them on, continuous service is generally preserved by separate statutory rules, which matters for redundancy pay and other length of service rights.

For employers:

Do not assume TUPE protections do not apply just because a transaction is structured to avoid them, get this checked, since the consequences of being wrong can be significant and retrospective.

For employees:

If TUPE does not apply, you are not obliged to move to a new employer, but if you choose to and they agree, your continuous service should carry over, check this is reflected correctly in any new contract.

Frequently Asked Questions

Does TUPE apply to a share sale?

No, buying shares in a company does not change who employs the staff, so TUPE is not triggered. Related asset transfers around the same time may still need separate checking.

Can my employer change my contract after a TUPE transfer?

Only in limited circumstances, a genuine business reason involving workforce changes, or where your contract already allows that type of change. Changes made simply because of the transfer are generally not valid.

What happens if I do not want to transfer to a new employer under TUPE?

You can object, but this ends your employment on the transfer date rather than keeping you with your original employer, and it is not treated as a dismissal, so redundancy pay typically will not apply.

Do I keep my length of service if I am transferred under TUPE?

Yes, your continuous employment carries over as if you had always worked for the new employer, which matters for redundancy pay, notice entitlement, and other service based rights.

What can I do if my employer does not consult me about a transfer?

A failure to properly inform or consult can lead to a tribunal award of up to 13 weeks' pay. Raising this through a union or employee representative, or seeking advice, is a sensible first step.

This guide provides general information only and is not legal advice. Anyone considering a specific contract claim or counterclaim, whether an employer or an employee, should contact us here contact@gec-law.co.uk for legal advice.