A Guide To TUPE For Employers

What is TUPE?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protect employees when a business or service transfers from one employer to another.

TUPE is designed to ensure that employees are not disadvantaged simply because ownership of a business changes or a service is outsourced, brought back in-house, or awarded to a new contractor.

When Does TUPE Apply

TUPE applies where there is a relevant transfer. There are two main types:

1. Business Transfers

A business transfer occurs when an economic entity transfers from one employer to another and retains its identity after the transfer.

Examples include:

• The sale of a business as a going concern.
• The transfer of part of a business.
• The purchase of a pub that continues operating as a pub after the sale.

The key question is whether the business operation continues in substantially the same form after the transfer.

2. Service Provision Changes

TUPE may also apply where services are:

• Outsourced to a contractor.
• Brought back in-house.
• Reassigned from one contractor to another.

Employees assigned to the organised grouping carrying out the activities are likely to transfer.

Examples include:

• Cleaning contracts.
• Security services.
• Catering contracts.
• Facilities management services.

What Happens if TUPE Applies

Where TUPE applies:

Employees Transfer Automatically

Employees assigned to the transferring business or service automatically become employees of the new employer.

Continuous Employment Is Preserved

Employees retain:

• Their length of service.
• Existing contractual terms.
• Most employment rights.

Employment Liabilities Transfer

The new employer inherits:

• Contractual obligations.
• Employment claims.
• Rights and liabilities connected with transferring employees.

Protection Against Dismissal

Dismissals connected solely to the transfer are generally automatically unfair unless there is a valid Economic, Technical or Organisational (ETO) reason.

Restrictions on Contract Changes

Terms and conditions cannot generally be changed simply because of the transfer.

Informing and Consulting Employees

Both the transferor and transferee have obligations to inform and, where required, consult affected employees.

Affected employees may include:

• Employees who will transfer.
• Employees who remain but whose roles may be affected.

Failure to comply can result in compensation of up to 13 weeks’ actual pay per affected employee.

Employee Liability Information (ELI)

The transferor must provide Employee Liability Information to the transferee at least 28 days before the transfer wherever possible.

This includes:

• Employee identities and ages.
• Employment terms.
• Disciplinary and grievance records.
• Collective agreements.
• Outstanding employment claims.

TUPE and Insolvenc

Different TUPE rules apply where the transferor is insolvent.

Terminal Insolvency Proceedings

Where liquidation is the primary objective, employees may not automatically transfer.

Non-Terminal Insolvency Proceedings

Where the objective is business rescue (such as administration), TUPE generally still applies, although:

• Some debts may transfer to the Secretary of State.
• Greater flexibility may exist regarding contractual changes.

TUPE and Pre-Pack Administrations

TUPE will usually apply to pre-pack sales.

Employees generally transfer with:

• Existing terms and conditions.
• Preserved continuity of service.
• Protection from unfair dismissal.

However, insolvency-specific exceptions can apply and specialist advice should be obtained.

Multiple Transferees

Following the Employment Appeal Tribunal decision in McTear Contracts Ltd v Bennett, employee responsibilities may potentially be divided between more than one incoming employer.

This can create practical difficulties regarding:

• Allocation of staff.
• Employment responsibilities.
• Contractual arrangements.

Employers should seek advice where multiple transferees are involved.

Frequently Asked Questions (FAQs)