TUPE for Employers

Ensuring your obligations are met.


When does TUPE apply?

TUPE applies to a ‘relevant transfer’, which can mean:

  1. A business transfer – where the business retains its economic entity following the transfer. This includes merger situations where two or more companies come together to create a new standalone company. As part of the business transfer the identity of the employer will, and must, change.
  2. A service provision change – such as when a service provided in-house is awarded to a contractor (and vice versa) or when a contact ends and is subsequently given to a new provider, as long as the work remains fundamentally the same. It does not apply to contracts for the supply of goods for a company’s use or for a single or short term event. 

Note some transfers can constitute both a business transfer and a service provision change.

TUPE does not apply to a transfer of shares.

What happens where TUPE is applicable?

TUPE will automatically transfer employees, and their employment particulars, from the old business to the new business. The employees are entitles to retain their existing terms of employment save for some limited exceptions. 

This automatic transfer applies equally to those who were employed immediately before the transfer or would have otherwise been employed if it were not for dismissal as a result of the transfer or connected to it unless the reason was an economic, technical or organisational reason (ETO reason).

TUPE affords employees certain protection against dismissal. Dismissals will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself. If the reason for dismissal is an ETO reason entailing changes in the workforce, the dismissal may be potentially unfair.

What happens if an employee does not want to transfer?

In the event that an employee opposes an exercisable TUPE transfer, their contract of employment will not automatically transfer. Instead, through operation of law, the contract will terminate when the transfer of the business takes effect. A termination in this manner would not be classed as a dismissal.

The obligation to consult and inform

Before a transfer of ownership takes place, employers have an obligation to consult and inform trade unions or employee representatives of when, why and the effects of the transfer taking place, as well as information regarding the use of agency workers.

If employers fail to consult and inform they may be required to provide each employee with 13 weeks’ uncapped pay as compensation. In the event of a penalty of this kind, the transferor and transferee can be jointly and severally liable.

Smaller companies (less than 10 employees) are able to consult and inform directly with their employees if there are no appropriate representatives available with which to consult.

Employee liability information

The transferor must provide the transferee with certain information about the transferring employees no less than 28 days before the transfer takes place. If this information is not given, the transferor may be subject to pay the transferee compensation of a minimum of £500 for each employee whose information was not provided.

For more information, download our TUPE Checklist.



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Meet the TUPE for Employers Team

Meet the TUPE for Employers Team