Transfer of Undertakings (Protection of Employment)

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protect employees' rights when a business (or part of one) transfers to a new employer, or when a service contract changes hands. Employees automatically transfer to the new employer on their existing terms and conditions; continuity of employment is preserved. The new employer cannot change terms and conditions to their detriment simply because of the transfer. Affected employees must be informed (and, if 10 or more are affected, consulted) by both old and new employers before the transfer. Dismissals connected to the transfer are automatically unfair unless an ETO (economic, technical, or organisational) reason entailing a change in the workforce applies. TUPE claims are brought in the Employment Tribunal; there is no minimum service requirement to claim automatically unfair dismissal under TUPE.

What it means in practice. TUPE applies in two situations: a business transfer, where an identifiable economic entity keeps its identity in new hands, and a service provision change, where a contract for services is outsourced, brought back in-house, or moves between contractors. The second is by far the more common in daily life — cleaning, catering, security, IT support, and care contracts change hands constantly. When it applies, your employment does not end and restart. Your start date, your terms, your accrued holiday, and any live disciplinary or grievance process all move across with you.

A worked example. Nadeem has cleaned the same office block for six years, employed by Contractor A. The building owner awards the contract to Contractor B. Nadeem is assigned to that contract, so he transfers automatically on his existing pay, hours, and continuity of service. Contractor B tells him it standardises everyone on a lower hourly rate. That change is void, because it is by reason of the transfer and not for an economic, technical, or organisational reason entailing a change in the workforce. Nadeem keeps his original rate, and his six years count if he is later made redundant.

Common pitfalls. The biggest misconception is that TUPE only concerns takeovers of whole companies — most disputes involve a single outsourced contract. The second is signing a new contract on the transfer date: agreeing to worse terms does not usually make them lawful, but it makes the claim harder to run, so take advice before you sign. Employers frequently fail to inform and consult, which carries a separate award of up to thirteen weeks' pay per affected employee, and pension rights transfer only in a limited form.

How it relates to other terms. If TUPE applies, there is usually no redundancy at all, so statutory redundancy pay does not arise. A dismissal connected to the transfer is automatically unfair with no qualifying service. Any tribunal claim must first go through Early Conciliation with Acas, and if you are offered a payment to accept new terms it will normally be documented as a settlement agreement.

What to do next. Read our TUPE transfers guide as soon as a transfer is announced, and record in writing anything you are told about changes to pay or hours. If the new employer proposes job cuts, read redundancy and collective redundancy consultation to check the process being followed.