Introduction to TUPE

Understanding TUPE (Transfer of Undertakings Protection of Employment) is essential for employers involved in business transfers, outsourcing, or insourcing processes. TUPE regulations protect employees’ rights when their employment transfers to a new employer. Getting it wrong can lead to legal disputes, penalties, and disruption. At Davenport Solicitors, we help employers manage TUPE processes smoothly, ensuring compliance with UK employment laws.

What is TUPE?

TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014. This cornerstone of UK employment law is designed to preserve employees’ existing contractual terms and working conditions when their employment transfers to a new employer.

The regulations implement the European Acquired Rights Directive into UK law, ensuring that employees don’t lose their rights and entitlements when a business changes hands. TUPE operates on the principle that employment relationships should continue uninterrupted despite ownership or service provision arrangements changes.

When Does TUPE Apply?

TUPE regulations come into effect in two primary scenarios:

1. Business Transfers (Regulation 3(1)(a)): When a business or part of a company is transferred from one employer to another as a going concern. This encompasses situations where:

• A complete business is sold.
• A specific department or function is transferred.
• Assets are transferred alongside the business activities.

2. Service Provision Changes (Regulation 3(1)(b)): When activities previously carried out by one organisation are:

• Outsourced: Activities transferred from a client to a contractor
• Insourced: Activities brought back in-house from a contractor
• Re-tendered: Activities moved from one contractor to another.

For TUPE to apply in these scenarios, an identifiable economic entity that retains its identity after the transfer and a relevant transfer of an organised grouping of resources must exist.

It’s worth noting that TUPE applies regardless of the business size or the sector it operates in. The regulations cover public and private sector transfers, though special provisions may apply to certain public sector transfers.

Types of Business Transfers Covered by TUPE

• Business sale or merger – When a business is sold as a going concern, TUPE typically applies to protect employees. 
• Outsourcing – TUPE applies when services are transferred to an external provider.
• Insourcing – When previously outsourced services are brought back in-house, employees delivering those services will typically transfer back to the original organisation.
• Contract changes – TUPE applies when a contract to provide services is reassigned to a new supplier.

Key Responsibilities for Employers

• Identify whether TUPE applies to the transaction.
• Inform and consult affected employees in advance.
• Provide employee liability information to the incoming employer.
• Ensure a smooth transition for employees.

Employee Rights Under TUPE

TUPE provides robust protections for employees who automatically transfer to new employers, with their employment terms and rights preserved. Specifically, employees retain:

Contractual Terms and Conditions

• All existing terms and conditions of employment
• Salary and bonus structures
• Working hours and shift patterns
• Holiday entitlements and arrangements
• Company benefits such as health insurance, company cars, and gym memberships.
• Contractual sick pay arrangements
• Maternity, paternity, and adoption leave entitlements.

Continuous Service Rights

• Unbroken length of service
• Rights dependent on service length (e.g., redundancy pay calculations)
• Accrued service-related benefits
• Probationary periods that were in progress

Protection Against Dismissal

• Protection against dismissal where the sole or principal reason is the transfer itself
• The right to claim unfair dismissal if dismissed in connection with the transfer without an ETO reason is also available.
• Right to resign and claim constructive dismissal if working conditions substantially change to their detriment.

Collective Agreements

• Terms derived from collective agreements in force at the time of transfer
• Rights under trade union recognition agreements
• Collectively negotiated terms that form part of individual contracts.

These protections ensure that the business transfer does not disadvantage employees and that their employment continues as if their contract had been initially made with the new employer.

Consultation Requirements

The consultation process is a critical element of TUPE compliance. Both incoming and outgoing employers have legal obligations to consult with affected employees or their representatives.

Employers must:

• Inform employees about the transfer in writing.
• Consult with recognised trade unions or employee representatives.
• Explain the impact of the transfer on employees.
• Address any changes that may occur post-transfer.

Information Employers Must Provide

The outgoing employer must provide the incoming employer with employee liability information, including:

• Employee contracts and details.
• Disciplinary records.
• Any claims or grievances raised.
• Information on collective agreements.

Employee Objections and Their Consequences

Employees have the right to object to being transferred to a new employer, but this decision carries significant consequences that should be carefully considered.

Process for Objecting

• Employees must communicate their objection to the transfer.
• The objection should ideally be in writing to create a clear record.
• No specific timeframe is prescribed in law, but it should generally be before the transfer occurs.
• Objections can be withdrawn if the employee changes their mind before the transfer.

Consequences of Objection

• Employment with the outgoing employer terminates on the transfer date.
• The employee is not automatically entitled to redundancy pay.
• The employee cannot claim unfair dismissal unless the objection is due to substantial detrimental changes in working conditions.
• The employee has no right to employment with the incoming employer.

Exceptions Where Compensation May Be Available

• When objecting due to substantial changes to working conditions to the employee’s detriment
• When the transfer would require relocation to another geographical location
• When there are fundamental breaches of contract connected with the transfer

Employer Responsibilities

• Clearly explain the consequences of objection to employees.
• Document all objections received
• Handle objections consistently
• Consider whether any patterns in objections suggest underlying problems with the transfer process.

Employers should recognise that many objections may indicate issues with how the transfer is managed or communicated and may warrant a review of the process.

Changes to Employment Terms After TUPE

Employers cannot change employees’ contracts simply because of the transfer. Changes are only allowed if:

• The reason is unrelated to the transfer.
• Employees agree to the changes voluntarily.
• An economic, technical, or organisational (ETO) reason requires changes.

Redundancy and TUPE Transfers

Redundancies in connection with TUPE transfers present particular challenges and legal risks for employers.

When Redundancies May Occur

• Duplication of roles following a merger or business combination
• Reorganisation of the business structure post-transfer
• Economic necessity requiring workforce reduction
• Location changes necessitating staffing adjustments

Legal Framework

• Dismissals are automatically unfair if the sole or principal reason is the transfer itself
• Redundancies may be fair if there is a genuine ETO reason
• The standard requirements for a fair redundancy process must still be followed
• Collective consultation obligations may apply in addition to TUPE requirements

Redundancy Process in the TUPE Context

1. Establish ETO reason
   • Document the business case clearly
   • Ensure the reason is genuinely unconnected to the transfer itself or is an ETO reason
2. Consultation
   • Individual consultation with at-risk employees
   • Collective consultation if 20 or more redundancies within 90 days
   • Consider the timing alongside the TUPE consultation
3. Selection
   • Use fair, objective, and non-discriminatory selection criteria
   • Consider pooling across the combined workforce where appropriate
   • Apply criteria consistently and transparently
4. Alternative Employment
   • Search for suitable alternative roles across the combined organisation
   • Consider redeployment, retraining, or flexible working options
   • Document all alternatives considered
5. Redundancy Payments
   • Calculate based on continuous service (including service with the previous employer)
   • Ensure contractual redundancy terms are honoured
   • Process payments promptly

Special Considerations

• Employees transferred cannot be made redundant to make way for the incoming employer’s existing staff
• Selection pools should generally include comparable employees from both organisations
• Pre-transfer dismissals anticipated by the incoming employer may still be deemed transfer-related

Careful planning and documentation of the redundancy process are essential to demonstrate that redundancies are for legitimate reasons and not simply to circumvent TUPE protections.

Dismissing Employees Under TUPE

Employees’ dismissals in connection with a TUPE transfer are subject to specific legal protections beyond standard unfair dismissal rules.

Automatic Unfair Dismissal

Dismissals are automatically unfair if:

• The sole or principal reason is the transfer itself
• The reason is connected with the transfer, and there is no ETO reason
• This protection applies regardless of the employee’s length of service

Know more about employee’s unfair dismissal

Permitted Dismissals

Dismissals may be fair if:

• The reason is entirely unconnected to the transfer
• The reason is connected to the transfer, but there is a genuine ETO reason
• The employer follows a fair procedure

ETO Reasons for Dismissal

Valid ETO reasons might include:

• Genuine redundancies due to business restructuring
• Performance issues addressed through proper procedures
• Misconduct is handled through appropriate disciplinary processes
• Inability to work in a new location where relocation is required

Dismissal Procedures

Even with a valid ETO reason, employers must:

• Follow the ACAS Code of Practice on Disciplinary and Grievance Procedures
• Conduct fair and transparent processes
• Consider alternatives to dismissal
• Provide appropriate notice periods
• Offer right of appeal
• Document all stages of the process thoroughly

Time Considerations

• No minimum timeframe after a transfer before dismissals can occur
• However, dismissals very soon after transfer face greater scrutiny
• Pre-transfer dismissals instigated by the incoming employer may still be deemed transfer-related

Consequences of Unfair Dismissal

• Compensation of up to one year’s salary (uncapped in some instances)
• Potential order for reinstatement or re-engagement
• Damage to employer reputation and employee relations
• Legal costs and management time

Employers should cautiously approach dismissals connected with a TUPE transfer and seek specialist legal advice to navigate this high-risk area.

Handling Employee Liability Information

The outgoing employer must provide employee details at least 28 days before the transfer. Failure to do so can result in financial penalties.

TUPE and Outsourcing

TUPE applies when services are outsourced to an external provider. Employees working in outsourced services are usually transferred to new employers.

TUPE and Insolvency

TUPE applies differently in insolvency situations, with variations depending on the type of insolvency proceedings involved.

Types of Insolvency Proceedings

1. Terminal Insolvency Proceedings
   • Aimed at liquidating assets and closing the business
   • Include compulsory liquidation and creditors’ voluntary liquidation
   • TUPE provisions are significantly relaxed
2. Non-Terminal Insolvency Proceedings
   • Aimed at rescuing the business as a going concern
   • Include administration, voluntary arrangements, and administrative receivership
   • Modified TUPE provisions apply

How to Conduct a TUPE Transfer Smoothly

A well-managed TUPE transfer protects business interests and employee rights while minimising disruption. 

• Plan early and assess whether TUPE applies.
• Communicate transparently with employees.
• Provide clear information to the new employer.
• Seek legal guidance to ensure compliance.

Throughout the Process

• Maintain detailed records of all communications and decisions
• Provide clear, consistent messaging to all stakeholders
• Seek specialist legal advice at key decision points
• Focus on employee well-being and engagement

Why Choose Davenport Solicitors for TUPE Advice?

At Davenport Solicitors, we have extensive experience advising employers on TUPE compliance. Our team helps businesses avoid costly mistakes and legal risks. We offer:

• Expert legal advice tailored to your business needs
• Guidance on consultation and employee communication
• Support with handling disputes and redundancies
• Bespoke solutions for smooth TUPE transfers
• End-to-end support throughout the transfer process

Our specialist employment law solicitors have successfully guided organisations of all sizes through complex TUPE transfers, from SMEs to large corporations, across private and public sectors.

We work collaboratively with your team to understand your objectives, identify risks, develop practical solutions, and ensure ongoing compliance—all delivered with responsive service that recognises the tight timescales often involved in business transfers.

Contact Us for TUPE Guidance

If you’re facing a business transfer, acquisition, outsourcing arrangement, or service provision change, our expert team is ready to provide the guidance you need to navigate the TUPE process successfully.

We offer an initial consultation to discuss your TUPE requirements and how we can support your business. Contact us

FAQs

1. Can I dismiss employees after a TUPE transfer?
   Only if a genuine business reason (ETO reason) is unrelated to the transfer.

2. What happens if an employee refuses to transfer under TUPE?
   They lose their job but are not entitled to redundancy pay.

3. Can I change employees’ contracts after a TUPE transfer?
   Only if there is a valid legal reason, such as an ETO reason.

4. What is the penalty for failing to provide employee liability information?
   The outgoing employer may face compensation claims from the incoming employer.

5. Does TUPE apply to temporary workers?
   Generally, it does not apply to agency workers.

Learn more about:

Employment Tribunal Representation

Staff Handbook and Contract of Employment Advice for Employers

Disciplinary Grievance and Investigation Employment Law Advice for Employers in the UK