How do TUPE transfers work?

Wednesday February 5, 2025

If you are going through the process of buying or selling a business, there will be countless thoughts going through your mind: Have you done your due diligence? Will the customers stick around? Do the numbers stack up?

Well, if employees are involved there are four important letters you should factor in too: T.U.P.E.

Transfer of Undertakings (Protection of Employment), or TUPE regulations, protect employees if their employment changes hands. They are a mandatory consideration and failure to comply means your business could face reputational damage and costly financial penalties.

They are a vital protection for employees, and just last month there was an example of 102 roles in the Midlands being saved and transferred via TUPE when a facilities management firm changed hands.

Here is a look at how TUPE transfers work.

 

When does TUPE apply?

TUPE impacts businesses in two scenarios: business transfers or service provision changes. So what are these in lay terms?

Business transfers are when a business (or part of a business) is transferred from one employer to another. TUPE comes into play when the identity of a business remains after a transfer: with the same staff, assets and clients.

Service provision changes are for contract transfers of goods or services. For example, you may be outsourcing services to a contractor, reassigning contracts or even in-sourcing services previously contracted out.

The most important thing to understand is that in either of these circumstances, TUPE is highly likely to apply, and this translates to staff transferring over on their existing terms and conditions, including maintaining their periods of continuous employment.

 

Who has what obligations during a TUPE transfer?

Whatever your role is within a TUPE transfer, you’ll want to ensure you’re fulfilling all the necessary obligations.

The buyers and sellers will have to work together, with the outgoing party sharing all the relevant employment information. This includes terms and conditions of employment, personal data of employees like age and length of continuous service; personnel files and payroll information.

If you are taking on the staff you will be required to continue with these terms and conditions, unless agreed otherwise by all parties, or it will be considered a breach of contract.

There is a duty to inform and consult with elected representatives or a recognised Trade Union. Both the existing and transferring staff must be involved. The financial penalty for failure to comply can be up to 13 weeks’ wages per employee.

During consultation the new company has to set out any changes that may happen. These might be economic, technical or organisational.

For example, when the companies combine, there may be an economic need for a reduction in certain staff, but you cannot simply make the transferees redundant. You have to pool them with the existing staff and make a decision using fair criteria. An example of organisational change may be a relocation of work. Everything must be consulted upon and explained fully, as well as set out in writing.

 

Tips for smooth TUPE transitions

As a well-intentioned, thorough business owner, you’ll want to ensure the TUPE transfer experience is as smooth as possible. Here are some tips to help:

Get organised ahead of the transfer

Make the process easier by conducting due diligence ahead of the transfer. Reviewing all of the contracts before a transfer will put you on the front foot – preventing any last-minute stress. Allow transferring staff to have meetings with the new management to reassure them.

Communicate effectively

Consulting staff about transfers is not only a legal requirement, but an opportunity to build trust and boost morale. Communicating with your team clearly will help manage expectations: reducing uncertainty and maintaining trust. This helps with workplace morale and productivity.

Terms and conditions cannot change

Once staff have transferred, terms and conditions cannot be changed.  Pensions and other benefits may be provided by another provider but must be of equal benefit. Government pensions have additional rules.

It ain’t over ‘til it’s over

We often see problems relating to TUPE come out of the woodwork after the transfer is complete, especially if the organisational changes are significant or redundancies were involved. Because of the rigidity of the rules, you can end up with quirks such as transferring staff having longer continuous service than you as the new employer have been in business. So as well as getting organised up front, don’t lose concentration towards the end.

 

Seek legal advice and support

TUPE transfers are a highly complicated piece of legislation and advice needs to be taken at the earliest stage. Our TUPE management service provides specialised support tailored to you and your business.

Get in touch today to see how we can support you and your business.

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