TUPE Annual Leave Entitlement

Under TUPE (Transfer of Undertakings) regulations, employees retain their existing terms and conditions including annual leave entitlement when transferring to a new employer.

Key Takeaways

• TUPE transfers preserve existing employment terms including annual leave
• Employees cannot lose leave entitlement due to a TUPE transfer
• Accrued but untaken leave must be honored by the new employer
• The transferor should provide accurate leave records to the transferee
• Employees with enhanced leave terms retain those terms post-transfer

How TUPE Protects Annual Leave

When a business transfers under TUPE:

1. Existing terms transfer — All contractual terms, including leave entitlements, transfer automatically
2. No reduction allowed — New employer cannot reduce leave below transferred levels
3. Accrued leave carries over — Any leave earned but not taken before transfer remains valid
4. Continuous service — Employment continuity is preserved for leave accrual purposes

What Transfers

Employer Obligations

Transferor (Selling Company)

• Provide accurate employee liability information to the transferee
• Disclose all terms and conditions including leave entitlements
• Provide records of leave taken and accrued

Transferee (Buying Company)

• Honor all transferred leave entitlements
• Apply existing terms from day one of employment
• Maintain records of transferred leave balances

Common Issues

Accrued Leave Calculation

Employees may have accrued leave between their last leave record update and the transfer date. This must be calculated and honored.

Enhanced Terms

Some employees may have negotiated enhanced leave terms. These must be preserved even if other employees have standard entitlements.

Collective Agreements

If leave terms are set by collective agreement, these transfer and must be honored by the new employer.

Leave Management During Transfer

Effective leave management during TUPE transfers requires:

• Accurate record keeping — Both parties must maintain complete leave records
• Clear communication — Employees informed of how their leave is being handled
• System migration — Leave balances transferred to new employer’s systems
• Policy alignment — Ensuring new employer’s policies accommodate transferred terms

Compliance Requirements

• Section 4 TUPE 2006 — Obligation to inform employees of transfer
• Regulation 11 — Employee liability information must be provided
• Working Time Regulations — Statutory minimum leave must be maintained
• ACAS guidance — Best practice for managing transfers