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TUPE

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TUPE

SECTION GUIDE

What is TUPE?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. It’s a piece of UK legislation designed to protect employees if the business they work for changes hands.

In simple terms, TUPE ensures that when a company or service is transferred to a new employer, employees move across too — keeping the same:

  • Contractual terms and conditions.
  • Employment continuity.
  • Legal protections against unfair dismissal.

What does TUPE mean in HR?

For HR professionals and business owners, TUPE is a cornerstone of employment law during business transfers, mergers, or outsourcing. It applies in two main situations:

  • Business transfers – when an organisation or part of it is sold or merged.
  • Service provision changes – when services are outsourced, brought back in-house, or reassigned to a different provider.

Key Points Under TUPE:

  • Employees transfer automatically to the new employer.
  • Terms and conditions of employment remain intact (pay, holidays, hours).
  • Length of service carries over, protecting redundancy and dismissal rights.
  • Dismissals due to the transfer are automatically unfair unless an “economic, technical, or organisational” (ETO) reason can be shown.

Real-world examples of TUPE:

  • A cleaning contract being awarded to a new supplier.
  • A catering service being brought back in-house by a school.
  • An SME being acquired by a competitor, with all employees transferring across.

Why does TUPE matter for your business?

TUPE compliance is not optional — ignoring it creates serious risks.

Risks of Non-Compliance:

  • Employment Tribunal claims for unfair dismissal or breach of contract.
  • Financial penalties for failing to consult staff or provide information.
  • Operational disruption due to anxious or disengaged staff.
  • Reputation damage from mishandling people during change.

Benefits of Managing TUPE Well:

  • Maintains employee trust and morale.
  • Smooths the transition for the new employer.
  • Ensures legal compliance and reduces tribunal risk.
  • Demonstrates strong leadership and people management.

For SMEs, TUPE is especially important when outsourcing services, winning contracts, or restructuring operations.

TUPE – Best practices for employers

Successfully managing TUPE requires careful planning, consultation, and communication. Getting it right protects your business from legal risk and helps employees feel secure during change.

  • Plan early

    Don’t wait until the last minute to think about TUPE. Map out which employees are affected, what the timeline looks like, and what risks might arise (such as redundancies or contractual liabilities). Early planning gives you time to gather accurate information, prepare communications, and avoid costly surprises.

  • Consult properly

    Consultation is not a tick-box exercise — it’s a legal requirement. Employers must inform and consult either elected representatives or, if none exist, individual employees. Discussions should be meaningful and allow staff to ask questions and raise concerns. Proper consultation builds trust and reduces the likelihood of disputes.

  • TUPE

  • Provide Employee Liability Information (ELI)

    The outgoing employer (transferor) must provide the incoming employer (transferee) with key details about staff — contracts, pay rates, working hours, disciplinary history, and any grievances. This must be done at least 28 days before the transfer. Failure to provide ELI can result in financial penalties and cause operational problems for the new employer.

  • Review contracts and policies

    Not all contracts are straightforward. Some employees may have enhanced benefits, restrictive covenants, or unique terms. Policies may also differ significantly between businesses. Reviewing these carefully helps both employers understand potential liabilities and integration challenges before the transfer takes place.

  • Communicate clearly

    TUPE can create uncertainty and anxiety. Employers should communicate regularly and transparently with staff about what is happening, when, and why. Clear messaging helps prevent rumours, reduces disengagement, and ensures employees feel supported. Written FAQs, meetings, and manager briefings can all help.

  • TUPE

  • Consider culture

    TUPE is not just a legal process — it’s also about people. Cultural fit is often overlooked but critical. If the new employer’s values, policies, or management style differ greatly, employees may struggle to adapt. Planning for cultural integration (e.g. joint team meetings, alignment of policies, or shared values sessions) supports a smoother transition.

  • Seek expert advice

    TUPE is legally complex and highly technical. Even small mistakes can lead to tribunal claims, financial penalties, or damaged reputations. Engaging HR or employment law specialists ensures compliance and helps manage the process efficiently, particularly for SMEs without in-house HR teams.

Common examples of when TUPE applies

TUPE doesn’t just apply to big corporate takeovers — it often arises in everyday business changes. Below are expanded examples across different sectors and scenarios:

  • Business sales and acquisitions

    • A small retailer sells one of its branches to another company — the shop staff transfer to the new owner.
    • An SME engineering firm sells part of its operations to a competitor, and the specialist engineers working in that area transfer over.
    • A hairdressing salon is purchased as a “going concern” by a new owner — all stylists, apprentices, and reception staff move across under TUPE.

  • Mergers and restructures

    • Two charities combine to form a single entity. All staff from both organisations transfer into the new charity.
    • A family-run printing business merges with another print provider — the employees from both businesses are protected under TUPE.
    • A professional services firm closes one office but transfers clients and staff to another branch.

  • Outsourcing of services

    • A business outsources its IT helpdesk to a third-party supplier. Staff dedicated to the helpdesk may transfer to the supplier.
    • A local authority outsources its waste collection to a private contractor. Bin collection staff transfer over.
    • A hotel decides to outsource housekeeping to a cleaning contractor. Housekeeping staff transfer to the contractor.

  • Insourcing (Bringing Services Back In-House)

    • A school brings catering back in-house after years of using an external catering company — catering staff transfer to the school.
    • A company takes its HR administration back from an outsourced provider, meaning HR administrators transfer back to the business.
  • Settlement Agreement

  • Retendering / Change of contractor

    • A cleaning contract for an office building changes hands — cleaners employed by the old contractor transfer to the new provider.
    • A hospital changes its facilities management provider — porters, cleaners, and maintenance staff transfer across.
    • A transport company switches its payroll outsourcing to a different provider — the payroll staff dedicated to that client transfer to the new provider.

  • Service provision changes in SMEs

    • A start-up changes accountants and the bookkeeping function is moved to a new provider, with staff potentially transferring.
    • A catering contract for a small café chain moves from one catering supplier to another.
    • A digital agency wins a contract previously handled by another agency. Designers and account managers dedicated to that client may transfer.

  • Franchising and licensing arrangements

    • A fast-food franchise changes hands between franchisees — staff working at the outlet transfer to the new operator.
    • A leisure centre run under licence moves to a new operator. The staff transfer under TUPE.

  • Insolvency situations

    A struggling SME goes into administration and is sold to a buyer. Staff still employed transfer automatically to the new owner.

Your Questions Answered

FAQs on TUPE

  • Does TUPE apply if a contract is re-tendered to a new supplier?Reveal

    Yes, TUPE often applies when a service contract moves to a new provider, such as cleaning, catering, or facilities management.

  • What if I don’t consult employees during TUPE?Reveal

    Both the old and new employer could face tribunal claims and compensation awards for failure to inform and consult.

  • What happens to employee benefits and pensions under TUPE?Reveal

    Most terms and benefits transfer, but occupational pensions have special rules — typically protected by separate legislation.

  • Can I dismiss employees because of TUPE?Reveal

    No. Dismissals linked to the transfer are automatically unfair unless justified by a valid “economic, technical, or organisational” (ETO) reason.

  • Can employees refuse to transfer under TUPE?Reveal

    Yes, employees can object to transferring, but this usually means their employment ends without redundancy pay.

  • Does TUPE apply to small businesses?Reveal

    Yes. TUPE applies to organisations of all sizes, including SMEs and micro-businesses.

  • What’s the legal minimum under TUPE?Reveal

    Employers must inform and consult affected employees and ensure that all contractual terms transfer without change.

Where to find out more A collection of hand-picked useful resources in relation to TUPE from impact HR and beyond

Need support with managing a TUPE process?

Whether you’re updating HR policies, training managers, or handling complex employee issues, impact HR can help you stay compliant, confident, and in control. Request a callback to see how we can support your business.

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