TUPE Transfers Explained: A Plain English Guide for UK Employers

TUPE stands for Transfer of Undertakings (Protection of Employment) Regulations 2006. It protects employees when the business they work for, or the service they work on, changes ownership or changes hands to a new contractor.

If TUPE applies, the transferring employees' jobs, terms and conditions, and employment continuity automatically transfer to the new employer. You cannot simply take over a business and re-hire staff on lower terms.

TUPE catches out a surprisingly large number of small and medium businesses that do not realise it applies to them. This guide explains the rules in plain English.

When Does TUPE Apply?

TUPE applies in two distinct situations.

1. Business Transfers

A business transfer happens when a business (or part of a business) is sold or transferred as a going concern to a new owner.

The key test is whether there is a transfer of an "economic entity" that retains its identity. If a new owner buys the business, takes on the staff, the customers, and the operations, TUPE almost certainly applies.

Examples of business transfers where TUPE applies:

Sale of a company's trade and assets (not just shares)
Sale of a specific department or division as a standalone operation
Franchise changes where the franchisee changes
A garage or restaurant that changes owners

Share sales: If you are buying the shares of a company (rather than its assets), TUPE does not apply. The company itself changes hands, but the employment relationships remain with the same legal entity.

2. Service Provision Changes

A service provision change (SPC) happens when a service is:

Outsourced from an in-house team to an external contractor
Transferred from one contractor to another (re-tendering)
Brought back in-house from a contractor

This is where many employers are surprised. If you take over a cleaning contract, a security contract, or an IT service contract from another company, TUPE may apply. The employees who were working on that contract for the previous provider may transfer to you automatically.

The requirements for SPC TUPE:

There must be an organised grouping of employees whose principal purpose was carrying out the service
The service must be essentially the same as before the transfer
The SPC provisions do not apply where the service is a one-off contract or a short-term task

What Happens When TUPE Applies?

Terms and Conditions Transfer

All employees who are assigned to the transferring business or service transfer to the new employer, with their existing terms and conditions intact.

This means:

Same pay
Same holiday entitlement
Same working hours
Same notice periods
Continuous service preserved (including for unfair dismissal, redundancy pay, and other rights)

You cannot simply offer them new contracts on your standard terms. Requiring transferring employees to accept worse terms as a condition of continued employment is a breach of TUPE. You also cannot change terms for a reason connected to the transfer.

Enhanced Dismissal Protection

Dismissing an employee because of the transfer, or for a reason connected to the transfer, is automatically unfair (from day one, no qualifying period required). There is no defence to an automatically unfair dismissal for a transfer-related reason.

You can dismiss transferring employees for an "economic, technical, or organisational" (ETO) reason entailing changes in the workforce. But the bar for an ETO reason is relatively high, and tribunal judges look carefully at whether the dismissal was really about the transfer.

Pensions

Occupational pension scheme rights do not automatically transfer under TUPE (unlike most other terms). However, the new employer must provide some form of pension provision to transferring employees. The Pensions Act 2004 requires the new employer to match employee contributions up to 6% through a stakeholder or money purchase pension scheme (if they do not maintain the transferred scheme).

Your Obligations as the Incoming Employer

If you are buying a business or taking on a service contract:

1. Due Diligence

Before completing the transfer, ask the outgoing employer for a list of all employees assigned to the business or service being transferred. Ask for:

Employment contracts
Current terms and conditions (pay, hours, benefits, notice periods)
Any outstanding disciplinary or grievance matters
Any ongoing tribunal claims
Current holiday balances and accrued liabilities

This information is provided through the "Employee Liability Information" (see below). Start the due diligence process early.

2. Employee Liability Information

The outgoing employer is legally required to provide "employee liability information" to the incoming employer at least 28 days before the transfer. This must include:

The identity of the employees transferring
Their age
Their employment particulars (written statement)
Details of any disciplinary action in the last two years
Details of any grievances in the last two years
Details of any legal action (tribunal claims, court proceedings)
Any collective agreements applicable to them

If the outgoing employer fails to provide this information, you can bring a claim in the employment tribunal for compensation.

3. Consultation

You must consult with transferring employees (or their representatives) before the transfer takes place. There is no minimum consultation period, but the consultation must be genuine. You cannot simply notify employees and present the transfer as a fait accompli.

Inform and consult about:

The fact of the transfer and the date it will happen
The legal, economic, and social implications for the employees
Any measures you (as the incoming employer) intend to take in relation to the employees

4. Continue Existing Terms

Do not issue new contracts to transferring employees on your standard terms. Their existing terms transfer with them. You can offer harmonisation of terms over time (bringing transferring employees onto the same terms as your existing employees), but you cannot force it as part of the transfer.

Your Obligations as the Outgoing Employer

If you are selling a business or losing a service contract:

1. Provide Employee Liability Information

Provide the incoming employer with full employee liability information at least 28 days before the transfer. If you miss this deadline, you risk a compensation claim.

2. Inform and Consult Employees

You must inform and consult affected employees (or their representatives) before the transfer. The consultation obligations are joint: both the outgoing and the incoming employer have obligations.

If the incoming employer intends to make changes to the employees' working arrangements, they must tell you (the outgoing employer) so you can include this in your consultation.

3. Do Not Dismiss Employees to Make the Transfer Easier

Do not dismiss employees to "slim down" the workforce before the transfer, if the reason for doing so is connected to the transfer. Such a dismissal is automatically unfair.

TUPE and Redundancy: Can You Make Redundancies After a Transfer?

Yes, but carefully. Post-transfer redundancies are permissible if they are for a genuine ETO reason that is not connected to the transfer itself (for example, a genuine reduction in demand for the work that would have happened anyway).

Redundancies made:

Immediately after the transfer
To harmonise the workforce of the incoming business
To reduce costs as a direct consequence of the transfer

...are likely to be found to be transfer-related and therefore automatically unfair.

Wait until you can demonstrate a genuinely independent business reason for any redundancy, and follow the full redundancy process.

Does TUPE Apply to Small Businesses?

Yes. There are no size thresholds for TUPE. A transfer of a two-person gardening business is subject to TUPE just as much as a transfer of a 200-person call centre.

However, the TUPE Regulations 2006 (as amended in 2014) made two concessions for small employers:

Micro-businesses: An employer with fewer than 10 employees can inform and consult affected employees directly, without needing to elect employee representatives.
Service provision changes: Additional evidence requirements apply for small service contracts, to prevent TUPE being triggered by small, short-term service changes.

Even with these concessions, the core obligations (terms protection, automatically unfair dismissal, employee liability information) apply to businesses of all sizes.

Common TUPE Mistakes

Mistake 1: Not knowing TUPE applies

Many employers going through an acquisition, a contract tender win, or a business purchase do not realise TUPE applies to them. If in doubt, assume it does and take advice before the transfer.

Mistake 2: Issuing new contracts immediately after the transfer

New contracts on your standard terms cannot be forced on transferring employees. If you issue new contracts and they accept under duress, those changes may not be enforceable (particularly if they are worse than the original terms).

Mistake 3: Not conducting consultation

Failing to consult before a TUPE transfer is a breach of the Regulations. The outgoing employer, the incoming employer, or both can be ordered to pay compensation of up to 13 weeks' actual pay per affected employee for failure to inform and consult.

Mistake 4: Failing to request employee liability information

As the incoming employer, chase the employee liability information early. You need it for planning and due diligence. If you do not receive it, you have a claim.

Mistake 5: Dismissing to make the business more attractive to buy/sell

If an employer dismisses employees before a sale specifically to make the business more attractive to the buyer, this is automatically unfair. The dismissed employees may also transfer to the buyer as if they had not been dismissed.

TUPE Checklist for Incoming Employers

[ ] Confirmed TUPE applies (business transfer or service provision change)
[ ] Received employee liability information from outgoing employer
[ ] Due diligence conducted on transferring employees' terms
[ ] Existing contracts and terms reviewed
[ ] Outstanding disciplinary, grievance, and tribunal matters noted
[ ] Consultation with transferring employees completed before transfer
[ ] Transferring employees given information about measures being taken post-transfer
[ ] Existing terms of employment maintained at transfer (no forced changes)
[ ] Pension provisions reviewed and compliant provision arranged
[ ] Holiday pay liabilities identified and provisioned

FAQ: TUPE Transfers UK

Does TUPE apply when I buy the shares of a company?

No. A share purchase transfers the company itself, not its assets. The employment relationships remain with the same legal entity (the company whose shares changed hands). TUPE does not apply to share sales.

Can I change employees' terms after a TUPE transfer?

Not if the reason for the change is connected to the transfer. You can change terms for an ETO reason that is not connected to the transfer (for example, a genuine restructure six months later for unrelated business reasons). The timing and circumstances are key: the longer after the transfer and the clearer the independent business reason, the less likely a tribunal is to find the change was transfer-related.

What is an ETO reason?

ETO stands for economic, technical, or organisational reason entailing changes in the workforce. An ETO reason is one of the few defences available for dismissals in a TUPE context. The reason must genuinely relate to the profitability, operation, or structure of the business, and it must involve changes in the number or functions of employees (not just a change in terms).

Can I make transferring employees redundant?

Yes, but not if the reason is connected to the transfer. Post-transfer redundancies made for genuine, independent business reasons (unrelated to the transfer itself) are permissible if you follow the full redundancy process.

Do part-time and zero hours workers transfer under TUPE?

Yes. All employees and workers assigned to the transferring business or service transfer, regardless of their contract type or hours.

What if a transferring employee refuses to transfer?

An employee can object to the transfer. If they object, their employment is terminated but not by dismissal: they simply opt out. They will generally lose their right to a redundancy payment (unless they can show the transfer would have resulted in a significant change to their working conditions to their detriment). An employee who objects to the transfer cannot bring an unfair dismissal claim.

Get Your TUPE Process Checked

Buying a business or taking on a service contract? Make sure you understand your TUPE obligations before the transfer completes.

EmployerKit Audit from £49. We review your employment documentation and identify any gaps in your TUPE compliance before the transfer.

Last updated: April 2026