What is TUPE?
TUPE (Transfer of Undertakings and Protection of Employment) is a complex piece of legislation which can be applicable when an organisation, or a part of it, transfers to another.
The primary aim of TUPE is to ensure that employees’ terms and conditions of employment are preserved when an organisation, or a part of it, is transferred to another.
TUPE transfers commonly happen when a new provider takes over commissioned services or a contract changes hands, for example in outsourcing arrangements, mergers, or when a business is sold. Interestingly in recent months we have also seen some employers seeking to shut down their whole or part of their operation due to financial constraints. Usually, redundancy would follow as a result but sometimes the outcome has been that the organisation, or services that they provide, have been taken over by another organisation, resulting in a TUPE transfer of affected employees.
TUPE can create many pitfalls for employers. In this blog post, we will delve into what TUPE is, why it matters, and how it affects both employers and employees.
When Does TUPE Apply?
TUPE can apply in two key situations:
Business Transfers
This occurs when an entire business or a part of it is transferred from one employer (the transferor) to another (the transferee). It could be the sale of a business, the outsourcing of services, or a merger or acquisition that involves a transfer of assets and employees.
Service Provision Changes
TUPE also applies when there is a change in the provider of services. For example, if a company outsources its cleaning services to a new cleaning contractor, the employees of the previous contractor might transfer under TUPE to the new contractor.
When Does TUPE Not Apply?
TUPE doesn’t usually apply if the transfer is of assets only, like shares or equipment, or if there exists a contract for services at a single event (such as a fundraising event), or if there is a change of provider, but the provider only supplies goods or resources, i.e. they don’t provide services.
We recommend that you always take professional advice to determine whether there is a relevant transfer.
TUPE Regulations
Transfer of Employment Contracts
Employees’ contracts automatically transfer to the new employer, meaning they retain their contractual terms and conditions.
Continuity of Employment
Employees’ length of service with the previous employer counts toward their statutory rights.
Transfer of Collective Agreements
Collective agreements are also transferred, preserving negotiated terms, which may “freeze” at the date of transfer.
Changes to Terms and Conditions Post-Transfer
Any changes to employee terms and conditions post-transfer must not be directly related to the transfer itself and must be justified by valid Economic, Technical, or Organisational (ETO) reasons to ensure compliance.
Workplace Pensions
Workplace pensions do not transfer with employees. The incoming employer must enrol employees in a new pension scheme. However, exceptions may apply for public sector pension schemes, so employers should seek professional advice where necessary.
TUPE Update: Key Changes for 2026
As of early 2026, staying compliant with a TUPE update means understanding how new laws have simplified some processes while increasing the stakes for others. Following the Employment Rights Act 2025, which became law in December 2025, several critical shifts have occurred:
Simplified Consultation for SMEs
For transfers after July 2024, businesses with fewer than 50 employees, or those transferring fewer than 10 employees, can now consult directly with staff rather than electing formal representatives.
Increased Protective Awards
The maximum protective award for failure to consult in collective redundancy increased from 90 to 180 days’ pay as of 6 April 2026.
“Day One” Rights
Paternity leave and unpaid parental leave have become day one rights from 6 April 2026. Separately, the qualifying period for unfair dismissal protection is being reduced from two years to six months, though this change isn’t expected to take effect until January 2027. Incoming employers must be ready to honour the day one rights immediately for transferring staff, and should start preparing now for the shorter unfair dismissal qualifying period ahead of its 2027 implementation.
TUPE Process
TUPE is a complex process that will need to be adjusted depending on the situation and what/who is being transferred. Responsibilities are different for the outgoing and incoming employer, but the below will give an overview of what is expected.
Employers should seek professional advice if they are unsure how to conduct a TUPE transfer.
Due Diligence Checks:
The incoming employer will likely want to conduct a due diligence check to ensure they are fully aware of all the risks and T&Cs of the incoming employees. The outgoing employer must also comply with the requirement to provide Employment Liability Information (ELI) to the incoming employer.
Inform and Consult:
Both the incoming and outgoing employers are required to inform and consult with employee representatives or Trade Union reps about the transfer. Failure to do so can result in financial penalties of up to 13 weeks’ pay per employee.
Where there are no employee reps or a recognised Trade Union, employers may need to hold elections to select employee reps. However, there is no need for collective consultation if there are no existing employee reps or trade unions and either:
- there are fewer than 50 employees
- fewer than 10 employees are transferring
In this case, employers can start individual consultation immediately with the employees affected by TUPE. Individual consultation is important, especially where measures are proposed (these are terms and conditions that will change as a result of the transfer). In this case, it is recommended that both the incoming and outgoing employer consult together with the affected employees.
The outgoing employer should give employees sufficient notice that the TUPE transfer is happening by providing a date of the transfer.
Onboarding New Employees
The incoming employer should try and arrange a welcome event or session where they can ease the new employees into the organisation and arrange a meet and greet with the existing staff.
TUPE and Redundancy:
Should there be any redundancies proposed the responsibility for redundancies are usually with the incoming employer. It is for this reason that employees cannot be made redundant until after the TUPE transfer has taken place.
How to Update Contracts so they are TUPE Compliant
Under TUPE, any changes to an employee’s terms are generally void if the main reason for the change is the transfer itself. To remain compliant:
Avoid “Harmonisation”
You cannot change contracts simply to align new staff with your existing team’s terms.
Use Valid ETO Reasons
Changes are only permitted for a valid Economic, Technical, or Organisational (ETO) reason that involves a change in the workforce, such as a restructuring.
Permitted Variations
Contracts can be updated if the original agreement allows for the change or if the variation genuinely improves the employee’s terms.
Document Everything
Keep written records of all consultations and ensure any agreed improvements are confirmed in writing.
TUPE FAQ’S
How long does protection from TUPE Last?
The protection afforded by TUPE is indefinite. Any change to contractual terms can only be made if the reason for the change is not the transfer itself, and has valid Economic, Technical, or Organisational (ETO) reasons
Can a new employer change the salary of transferring employees?
Any change to contractual terms, including pay, can only be made if the reason for the change is not the transfer itself, and has valid Economic, Technical, or Organisational (ETO) reasons
How Long After TUPE can the new employer change terms and conditions?
Changes to contractual terms can be proposed at any point after the transfer, as long as the reason for the change is not the transfer itself, and has valid Economic, Technical, or Organisational (ETO) reasons.
However, a new employer can only renegotiate any previously agreed collective agreements with employees one year after the TUPE transfer.
How can you avoid a TUPE transfer?
TUPE is a mandatory law that protects employees when a business is sold or transferred to a new owner, employers can’t avoid TUPE if there is a relevant transfer.
What happens if an employee refuses to transfer under TUPE?
An employee can object to transferring to the new employer. If they do, their employment will usually end on the transfer date, and they will generally not be entitled to redundancy pay or be able to claim unfair dismissal.
What is Employee Liability Information (ELI) and when must it be provided?
Employee Liability Information (ELI) is a set of information that the outgoing employer must provide to the incoming employer about transferring employees. It includes details such as employees’ identities, terms and conditions, disciplinary and grievance records, collective agreements, and any relevant employment claims. The information must be provided at least 28 days before the transfer date, although sharing it earlier is considered best practice.
Do casual, zero-hours or agency workers transfer under TUPE?
It depends on their employment status and their connection to the transferring service or business. Employees, including some individuals working on zero-hours contracts, may transfer if they are assigned to the transferring undertaking. Agency workers do not usually transfer as employees under TUPE, although information about agency workers must be shared as part of the consultation process. Because employment status can be complex, organisations should obtain advice where there is uncertainty.
Can an employee claim constructive dismissal after a TUPE transfer?
Potentially, yes. If the new employer makes significant changes to an employee’s working conditions that are detrimental and connected with the transfer, the employee may resign and bring a claim. Whether a claim succeeds will depend on the specific circumstances and the extent of the detrimental change. Employers should therefore approach any post-transfer changes carefully and seek advice before implementing them.
Conclusion
TUPE is a key piece of legislation that ensures the rights and protections of employees during business transfers and service provision changes.
Employers should carefully navigate the TUPE process, seeking expert advice when necessary, to ensure compliance and maintain positive employee relations during these challenging transitions.
How can Roots HR help?
We have a fantastic FREE HR factsheet on TUPE, why not request your copy here?
Do you need support in managing a TUPE? We can help so do ring us on 01562 840060 or contact us to book a call with one of our consultants.
