The Transfer of Undertakings (Protection of Employment) Regulations 2006 — commonly known as TUPE — is the UK framework that protects employees when a business or part of a business is transferred from one employer to another. When a TUPE transfer applies, the employees’ contracts transfer automatically to the new employer on their existing terms. The outgoing and incoming employers must inform and consult affected employees, and any dismissal connected with the transfer is automatically unfair unless it is for an economic, technical, or organisational reason entailing changes in the workforce.

This guide covers when TUPE applies, the information and consultation duties, what happens to employee terms, and the most common traps for employers on both sides.

Key takeaways

  • TUPE applies to a business transfer (sale of a business) or a service provision change (outsourcing, insourcing, or re-tendering), under the Transfer of Undertakings (Protection of Employment) Regulations 2006.
  • Employees’ contracts transfer automatically to the new employer on the existing terms.
  • Both the outgoing and incoming employer must provide employee liability information at least 28 days before the transfer.
  • The outgoing employer must inform and consult affected employees or their representatives.
  • Any dismissal connected with the transfer is automatically unfair unless there is an economic, technical, or organisational reason entailing changes in the workforce.
  • Post-transfer changes to terms are prohibited unless they are for an economic, technical, or organisational reason entailing changes in the workforce.

When TUPE applies

Business transfers

TUPE applies where there is a transfer of an undertaking (a business or part of a business) as a going concern. This covers:

  • Sale of a business as a going concern
  • Merger of two businesses
  • Transfer of part of a business to another employer

The transfer must involve an identifiable economic entity — a group of assets (including goodwill) that constitute a business. The transfer of a single employee is not enough.

Service provision changes

TUPE also applies to service provision changes, where a contractor provides a service and the client engages a new contractor, or the client takes the service in-house. This covers three situations:

Situation Example
Outsourcing An in-house cleaning team is transferred to a specialist cleaning contractor
Insourcing A contracted-out IT support function is brought back in-house
Re-tendering A catering contract moves from Contractor A to Contractor B

The service must have been organised in connection with the carrying out of activities on behalf of the client, and the activities must be fundamentally the same after the transfer.

What is not covered

  • Share transfers (selling shares in a company does not transfer the underlying business)
  • Transfer of assets alone (e.g., sale of a client list without the employees)
  • One-off or short-term contracts (the service must have been “organised” for the purpose of the contract)

Employee rights on transfer

Automatic transfer of contracts

Under regulation 4, the outgoing employer’s contracts of employment transfer to the incoming employer by operation of law. The employee does not need to consent, and the incoming employer cannot refuse to take on the employees.

The transferred contracts preserve:

  • Terms and conditions of employment
  • Continuous service
  • Accrued rights (e.g., holiday pay, redundancy entitlement)

Dismissal connected with the transfer

Any dismissal that is connected with the transfer is automatically unfair unless the employer can show an economic, technical, or organisational reason entailing changes in the workforce (ETO reason) — regulation 7.

An ETO reason might include a genuine reorganisation that requires different skills, a reduction in headcount to reflect a genuine change in the scope of the business, or financial difficulties that necessitate redundancies. The reason must be genuine and the dismissal must be proportionate.

The duty to inform and consult

Employee liability information

The outgoing employer must provide the incoming employer with employee liability information at least 28 days before the transfer — regulation 11. This includes:

  • The names, ages, and employment details of affected employees.
  • Any claimed or existing union recognition agreements.
  • Information about disciplinary and grievance proceedings.
  • Details of any legal proceedings related to the employees.

Informing affected employees

The outgoing employer must inform affected employees of:

  • The fact of the transfer, the date, and the reason.
  • Any legal, economic, or social implications for the employees.
  • Any measures envisaged in connection with the transfer.
  • If no measures are envisaged, a statement to that effect.

Consulting with representatives

Where the employer contemplating measures in connection with the transfer, it must consult with affected employees or their representatives. “Measures” is broadly interpreted — it includes any change to the employees’ working conditions, even a change that the employer considers favourable.

If the employer is proposing dismissals for reasons connected with the transfer, the consultation must begin at least 30 days before the first dismissal (or 45 days where 100 or more are proposed).

Changes to terms after transfer

Under regulation 4(4)–(5), any variation of the transferred terms that would be void or unenforceable if made in a contract between the employee and the original employer is also void or unenforceable after the transfer.

The incoming employer can only change terms if:

  1. The reason for the change is an ETO reason entailing changes in the workforce, and
  2. The employee has been informed of the change (or will be).

This is a high bar. A change to terms because the incoming employer uses different pay structures or benefit arrangements does not automatically qualify.

Common pitfalls

1. Not recognising a TUPE transfer

The most common mistake is failing to recognise that TUPE applies. An employer who re-tenders a contract without telling the incoming employer about the affected employees is breaching the information and consultation obligations.

2. Providing incomplete employee liability information

The outgoing employer’s obligation is to provide full and accurate information. Where the information is incomplete or inaccurate, the incoming employer may have a claim for compensation.

3. Dismissing employees before the transfer

Dismissals before the transfer date may still be “connected with the transfer” — the connection is assessed at the time of the dismissal, not at the time of the transfer.

4. Treating TUPE as a chance to “harmonise” terms

The incoming employer cannot use the transfer as an opportunity to bring all employees onto the incoming employer’s standard terms. Each employee’s transferred terms remain in place unless a valid ETO reason justifies a change.

Putting it into practice

Five steps to build TUPE into your transfer process:

  1. Identify TUPE early — engage legal advice before the transfer is announced so the information and consultation obligations are mapped.
  2. Prepare the employee liability information — the 28-day clock starts from the transfer date, not from when you start thinking about it.
  3. Draft the Section 188 letter — the notification to employees must include the fact, date, reason, and any measures.
  4. Document the consultation — each meeting should be recorded, and the representatives’ views must be taken into account.
  5. Audit the transferred contracts — after the transfer, compare the employees’ original terms with the incoming employer’s standard terms and flag any differences.
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Managing TUPE transfers — from employee liability information to post-transfer term audits — requires keeping records accurate across two employers. A system that tracks terms, service dates, and consultation timelines makes the process manageable.

Sources

This article is general information, not legal advice. TUPE is complex and fact-specific — consult an employment solicitor for advice on specific transfers.