If you are buying or selling a business, outsourcing a service, or changing contractors, there is a good chance TUPE will apply. For many small business owners, TUPE is one of those areas of employment law that feels complex and high-risk. The good news is that with the right preparation, it does not need to be.
This guide breaks down the key principles of TUPE, your obligations as an employer, and the practical steps you can take to manage a transfer smoothly.
What is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. It is the UK legislation that protects employees when the business they work for, or the service they are assigned to, changes hands.
The purpose of TUPE is straightforward: employees should not lose their jobs or have their terms and conditions worsened simply because their employer has changed. When a TUPE transfer takes place, affected employees automatically move to the new employer on their existing terms.
TUPE applies across a wide range of business scenarios, including company sales, mergers, outsourcing arrangements, insourcing, and changes of contractor for an ongoing service.
When Does TUPE Apply?
The Regulations recognise two types of transfer.
Business transfers
A business transfer occurs when a business, or a distinct part of a business, moves to a new owner and retains its identity as a going concern. This covers traditional acquisitions, mergers, and situations where part of an organisation is carved out and sold. The key test is whether an "economic entity" has transferred and continues to operate in essentially the same way under the new owner.
Service provision changes
A service provision change occurs when activities carried out by one organisation are taken over by another. This includes outsourcing (bringing in an external provider to deliver a service previously done in-house), insourcing (bringing a previously outsourced service back in-house), and re-tendering (switching from one contractor to another for the same service). For TUPE to apply, there must be an "organised grouping of employees" whose principal purpose is carrying out the activities in question.
What Transfers Automatically
When TUPE applies, a number of things move across to the new employer by operation of law:
- Employment contracts transfer on their existing terms and conditions, including pay, benefits, working hours, and holiday entitlement. For more on what those terms typically include, see our guide on what to include in an employment contract.
- Continuity of service is preserved. The employee's start date with the old employer counts as their start date with the new one.
- Existing rights and obligations transfer, including any outstanding claims or liabilities connected to the employment.
- Trade union recognition agreements transfer where the organised grouping of employees maintains a distinct identity after the transfer.
There are limited exceptions. Rights under occupational pension schemes relating to old age, invalidity, or survivors' benefits do not transfer automatically. Criminal liabilities also remain with the original employer.
Employee Protections Under TUPE
TUPE provides strong protections for affected employees.
Automatically unfair dismissal. Any dismissal where the sole or principal reason is the transfer itself will be automatically unfair. This applies whether the dismissal happens before or after the transfer date.
The ETO defence. The only exception is where the employer can demonstrate an Economic, Technical, or Organisational (ETO) reason for the dismissal that entails changes in the workforce. An ETO reason might include a genuine redundancy situation (see our guide on how redundancy pay is calculated), a need for employees with different skills, or a workplace relocation. Even where an ETO reason exists, the employer must still follow a fair process.
Protection of terms and conditions. Any variation to an employee's contract will be void if the sole or principal reason for the change is the transfer. This means you cannot simply harmonise transferring employees onto your existing terms immediately after the transfer.
The Duty to Inform and Consult
Both the outgoing employer (the transferor) and the incoming employer (the transferee) have a legal duty to inform and consult with affected employees.
What you must do
The transferor must provide the following information to appropriate employee representatives "long enough before" the transfer to allow meaningful consultation:
- The fact that the transfer is going to take place and the approximate date
- The reasons for the transfer
- The legal, economic, and social implications for affected employees
- Any "measures" that either employer plans to take in connection with the transfer (such as restructuring, changes to reporting lines, or relocations)
If either employer intends to take measures affecting employees, they must consult with employee representatives about those measures. Consultation must be undertaken with a view to seeking agreement, not simply going through the motions.
Simplified rules for small businesses
Since 1 July 2024, the consultation process has been simplified for smaller employers. Businesses with fewer than 50 employees can now consult directly with employees rather than setting up formal elected representatives. The same applies when fewer than 10 employees are transferring, regardless of the employer's overall size. This simplification only applies where there are no existing employee representatives already in place, such as a recognised trade union.
Employee Liability Information
The transferor must provide the transferee with written employee liability information at least 28 days before the transfer. This includes:
- The names, ages, and employment particulars of transferring employees
- Details of any disciplinary or grievance proceedings in the previous two years
- Any ongoing or potential employment tribunal claims
- Details of any applicable collective agreements
Failing to provide this information on time can result in a compensation award of at least 500 pounds per employee affected.
Upcoming Changes to Watch
The Employment Rights Act 2025 introduces new provisions specifically addressing TUPE in the context of public sector outsourcing. These changes, expected to take effect from October 2026, will include a statutory code of practice designed to prevent a "two-tier workforce" developing when public services are contracted out.
The government is also consulting on whether TUPE protections should be extended to cover all "workers" rather than just employees, which would bring agency workers and some contractors within scope. This is a significant development that businesses involved in outsourcing arrangements should monitor closely.
Practical Tips for Managing a TUPE Transfer
Getting TUPE right comes down to early preparation and clear communication.
Start planning early. Conduct thorough due diligence on the employees who may be in scope. Identify potential issues such as ongoing disputes, complex contractual terms, or pension commitments before they become problems.
Keep clear records. Gather and organise employee liability information well in advance of the 28-day deadline. Incomplete or late information creates legal risk and damages trust.
Communicate openly with staff. Employees going through a transfer are understandably anxious. Keeping them informed throughout the process reduces uncertainty and helps maintain morale and productivity.
Get HR advice before the transfer, not during or after. TUPE obligations begin well before the transfer date. Waiting until the last minute to address compliance leaves you exposed to claims and can derail the entire process.
How Rebox HR Can Help
TUPE transfers are one of the most common projects we support businesses through. Whether you are acquiring a company, outsourcing a function, or taking on employees from another provider, our team can guide you through every stage.
Our dedicated TUPE support service covers due diligence, employee liability information, consultation planning, and post-transfer integration. If you are facing a transfer and want to make sure you get it right, book a free consultation to talk it through with one of our HR consultants.
TUPE is also a core part of our broader HR project support offering, which covers restructuring, redundancy, and other one-off HR projects that need specialist input.
