A Transfer of Undertakings (Protection of Employment), (TUPE) applies when a business transfers to a different company or there is a service provision change.
During this process, the old and new employer will identify who is affected and provide relevant employee information before the transfer is complete. These regulations protect employees rights, even when they are officially under a new company.
There are also certain requirements that an employer must meet before a transfer can take place. This also applies to any specific contractual changes that may arise. Learn more about TUPE below.
When TUPE applies
The following are types of TUPE transfers:
- an organisation, or part of it, is transferred from one company to another, such as mergers or transfers in administration
- transfers all or part of business or partnership
- a service transfers to a different provider, such as contracting services in-house or externally, or changing contractors
- some of employees of a company are not transferring to a new employer
TUPE is applicable to a transfer from a company in the public sector into the private, or between two different public companies.
However, TUPE does not apply to transfers when it is the same employer in the public sector, such as transfers within the Civil Service.
What happens with a TUPE transfer
The current employer must inform the employee or union of the transfer, and specific details surrounding the process such as when it will occur and how it will affect employees.
In some cases, the new employer will also consult employees regarding any possible contractual changes the transfer may entail, such as the location of work or working hours.
Provide employees with information about the transfer
The process may vary but before the transfer employers must inform employees:
- that the transfer is happening, including why it is occurring and when it will come into effect
- who are the employees affected by the transfer, this may be communicated to the employee(s) directly or via their trade union representative, if applicable
- whether there will be any company reorganisation or restructuring
Provide employee and contract information to new employer
The old employer provides the new employer with information about the employees who are transferring. This is also known as 'employee liability information'.
The information an employer requests may vary, but it may include an employees’ name and age.
Under TUPE, the new employer takes over employees’ employment contracts, including:
- previous terms and conditions of employment
- holiday entitlement
- length of service (period of employment)
- any collective agreements, such as with an employer and a trade union
- any discrimination claims or grievances against the previous employer
- current pension contributions
It is a legal requirement that the employer provides the above information. They also must give the affected employee(s) sufficient time before the transfer to ask any questions and discuss proposed changes.
On the date of the transfer, the new employer automatically takes over the employment contract so an employee will not get a new contract.
The TUPE Regulations 2006 protect UK employees to the same terms and conditions as they had before the transfer.
An employee is protected under TUPE regulations if they are:
- legally classed as an employee
- part of the organisation that is transferring is based in the UK
Is there a notice period?
Employees should be given notice in advance about a TUPE transfer, but there is no legal length of time. Since the contract is not ending; they are not entitled to give the same notice period, such as when a contract is terminated.
Can employees not accept the transfer?
An employee does not have to accept the transfer to the new employer, but there is a possibility that they may not be able to claim redundancy pay or unfair dismissal.
It is recommended to speak with an employer to discuss their possible options to see if they can reach a mutual agreement. Employees can seek legal advice via Acas helpline for further support.
If a solution is not found an employee’s contract will end on the date of the transfer. They will usually be expected to work their notice period and will be paid their normal salary as per their contract.
Employee’s rights if they are not informed about TUPE transfer
If an employee, or their representatives, have not been informed about a TUPE transfer, the employer has breached TUPE regulations. Employees can make a claim to an Employment Tribunal. It is recommended that employees make these claims as soon as they find out about the transfer.
Redundancy rights during TUPE transfer
The new employer cannot make employees redundant when they were transferred from another employer.
If an employee is made redundant for an ‘economic, organisational or technical’ (ETO) reason’, they may be entitled to a redundancy payment.
Insolvency rights during TUPE transfer
TUPE regulations will apply if the old employer is insolvent and the business is being taken over by another company.
However, the employees are unlikely to be protected under TUPE if the business is closing down.
Employees can make a claim if they are owed money by an insolvent company. This applies to employees who are protected under TUPE or not.
Contract changes and rights
TUPE regulations mean that employees should not lose any of their existing employment rights. As with any employment contracts, employers can only change a contract with prior consent from employees.
Before or after the transfer, the new employer cannot change any terms or conditions if the reason is the transfer itself.
A new employer can make changes to terms because of the transfer if:
- they improve the contract’s terms and conditions, for example increases annual leave or salary
- there is an ETO reason involving a change in the workforce, such as organisational restructuring
- matching contracts with existing employees
Any agreement cannot break statutory employment rights. If an employer breaches the contract, any employee or representative can take legal action against the employer.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.