TUPE regulations: Expert support for UK employers

When a business changes hands, the employees who work in it do not simply get left behind. UK law protects them through a set of regulations known as TUPE. Whether you are buying a company, selling part of your business, outsourcing a service, or taking on a contract from another provider, TUPE is almost certainly relevant to you, and getting it wrong can be expensive.

At The HR Dept, our HR specialists guide UK employers through every stage of the TUPE process, from the first assessment of whether TUPE applies through to post-transfer compliance. We take the complexity out of it so you can focus on the business.

What we cover:

• What is TUPE? 
• When does TUPE apply? 
• Employee rights under TUPE 
• The TUPE process 
• TUPE and redundancy 
• Penalties for non-compliance 
• How we can help 
• TUPE FAQ 

What is TUPE?

TUPE stands for Transfer of Undertakings (Protection of Employment). It is a set of UK employment regulations whose purpose is straightforward: to protect employees when the business or service they work for changes hands. Under TUPE, employees do not need to negotiate new contracts with a new employer. Their existing terms and conditions, continuity of employment, and statutory rights transfer automatically to the incoming employer.

TUPE applies to all UK businesses, regardless of size. Whether you run a large organisation or a small local firm, the same obligations apply. It covers both the outgoing employer (the transferor) and the incoming employer (the transferee).

There are two types of transfer covered by TUPE:

Business transfers

A business transfer occurs when a business, or a distinct part of a business, moves from one employer to another and continues operating in broadly the same way. This typically happens in sales, mergers, and acquisitions. The key test is whether the business retains its identity after the transfer. If it does, TUPE almost certainly applies.

Examples include: the sale of a company or part of a company; the transfer of a sole trader business; the transfer of a limited company's trade and assets (rather than its shares).

Service provision changes

A service provision change occurs when a contract for services moves from one provider to another. This is the situation most commonly encountered by SMEs. It covers three scenarios: outsourcing, where a service previously done in-house is taken over by an external contractor; insourcing, where a contract ends and the work is brought back in-house; and retendering, where a contract ends and is awarded to a new provider.

For TUPE to apply to a service provision change, the employees involved must form an organised grouping specifically dedicated to the work in question, and the client receiving the service must remain the same.

When does TUPE apply (and when does it not)?

TUPE applies in a wide range of situations, but not in all business changes. Understanding the distinction is one of the most common sources of confusion for employers.

TUPE is likely to apply in the following circumstances:

• Mergers and acquisitions where the business continues operating
• Sales of all or part of a business as a going concern
• Changes of licensee or franchisee
• Outsourcing of a service previously delivered in-house
• Insourcing of a service previously delivered by a contractor
• Retendering of a contract to a new provider
• Transfers from companies in administration (in some circumstances)

TUPE does not apply in the following circumstances:

• Share transfers: if a company's shares are sold but the legal employer does not change, TUPE is not triggered
• Asset-only transfers: buying equipment, property, or other assets without acquiring the business or its employees
• One-off or short-term contracts: a single event or short-term task that is not part of an ongoing service
• Transfers outside the UK: TUPE applies only where the transferred part of the business operates within the UK
• Significant transformation of business identity: if the nature of work changes radically, TUPE may not apply

A useful rule of thumb: if the business or service retains its identity after the transfer, TUPE applies. If the character of the work fundamentally changes, it may not. This is a complex assessment and one where taking professional advice early is strongly recommended.

Not sure whether TUPE applies to your situation? 

Employee rights under TUPE

When a TUPE transfer takes place, the following protections apply automatically to affected employees:

• Automatic transfer: All employees assigned to the business or service being transferred move to the new employer automatically, on their existing terms and conditions. The incoming employer cannot pick and choose which employees to accept.
• Continuity of employment: Transferring employees retain their original start date and all accrued employment rights, including holiday entitlement, notice periods, and redundancy entitlement.
• Terms and conditions preserved: Pay, benefits, working hours, and all other contractual terms transfer unchanged. The incoming employer cannot impose new or inferior terms simply because of the transfer.
• Protection from dismissal: Dismissing an employee because of a TUPE transfer is automatically unfair. Dismissal may only be justified where there is a valid economic, technical, or organisational (ETO) reason.
• Right to object: An employee may refuse to transfer. However, if they do so, their employment ends on the transfer date without redundancy pay in most circumstances.

Only direct employees are covered by TUPE protections. Agency workers who are not employed by the transferring business do not transfer automatically, though their status should always be assessed on a case-by-case basis.

The TUPE process: What employers need to do

Both the outgoing employer (transferor) and the incoming employer (transferee) have specific obligations under TUPE. Failing to meet these obligations can result in significant financial penalties. 

Here is the process in outline:

1. Identify affected employees: Determine which employees are assigned to the business or service being transferred. The test is whether the employee spends the majority of their time on the transferring work.
2. Inform and consult: Both employers must inform and consult affected employees, or their elected representatives, in good time before the transfer date. The consultation must be meaningful and allow sufficient time to inform and fully consult, though in practice, the time available will depend on the speed of the transaction.
3. Provide Employee Liability Information (ELI): The outgoing employer must provide the incoming employer with written details of each transferring employee at least 28 days before the transfer date.
4. Transfer date: On the agreed transfer date, employees move automatically to the incoming employer with all their existing rights intact.
5. Post-transfer obligations: The incoming employer assumes responsibility for all employment liabilities, including any ongoing grievances, disciplinary matters, or potential tribunal claims. Records should be retained for at least six years.

The TUPE consultation obligation

Both the outgoing and incoming employer must inform and consult with affected employees, or their elected representatives, before the transfer takes place. The consultation must be meaningful: it is not enough to simply notify employees that a transfer is happening. Employees are entitled to understand the reasons for the transfer, the legal and economic implications, and any measures either employer intends to take.

Where the incoming employer anticipates making 20 or more employees redundant after the transfer, separate collective redundancy consultation obligations will apply, and those have their own specific timescales. If you are in this situation, take advice early.

Employee liability information (ELI)

The outgoing employer must provide the incoming employer with written ELI at least 28 days before the transfer date. ELI must include: the identity and age of each transferring employee; their employment particulars (contracts, pay, hours); disciplinary and grievance records from the past two years; information about any employment tribunal claims; and details of any collective agreements in place.

If the outgoing employer fails to provide ELI, the incoming employer can bring a legal claim against them. The minimum compensation for ELI failure is £500 per employee under current regulations.

TUPE and redundancy: What employers need to know

One of the most frequently asked questions about TUPE is whether the incoming employer can make redundancies after the transfer. The short answer is: it depends.

Dismissing an employee because of the transfer itself is automatically unfair dismissal. However, redundancy may be lawful where there is a genuine economic, technical, or organisational (ETO) reason that involves a change in the workforce. An ETO reason must be connected to the needs of the business, not simply to the fact that a transfer has taken place.

Examples of valid ETO reasons include: genuine restructuring that reduces the number of roles needed; a change in the nature of the work requiring different skills; or a change in the location of the workplace. Each case will be assessed on its own facts, and employers should take legal advice before making any redundancies in the context of a TUPE transfer.

TUPE transfers and redundancy can also intersect with the wider rules on collective redundancy consultation. For HR Dept support with restructuring and redundancies, see our redundancy consultation service. 

Penalties for getting TUPE wrong

The financial consequences of non-compliance with TUPE are significant and should not be underestimated:

• Failure to inform and consult: Employment tribunal can award up to 13 weeks' gross pay per affected employee. There is no minimum service requirement for this claim.
• Failure to provide Employee Liability Information: Compensation based on the losses suffered by the incoming employer, with a minimum award of £500 per employee under current regulations.
• Automatically unfair dismissal: Where an employee is dismissed in connection with a TUPE transfer without a valid ETO reason, they can bring an unfair dismissal claim. Awards can include a basic award plus a compensatory award of up to £115,115 (2025 figure).

Beyond the financial risk, a poorly managed TUPE transfer can cause lasting damage to employee morale, trust, and retention in the incoming business, at exactly the point when stability matters most.

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How The HR Dept helps with TUPE

TUPE is one of the more complex areas of UK employment law, and the stakes for getting it wrong are high. The HR Dept provides end-to-end TUPE support for SMEs across the UK, covering everything from the initial assessment to post-transfer compliance.

Here is what we can do for you:

• TUPE assessment: We establish whether TUPE applies to your situation and advise on the likely scope and obligations before the process begins.
• Consultation management: We guide you through the inform-and-consult process, help elect employee representatives where needed, and ensure the consultation is legally compliant and well-documented.
• Employee liability information: We ensure the outgoing employer meets the 28-day ELI obligation and that the incoming employer receives and acts on the information correctly.
• Documentation: We prepare all required notices, letters, and records to protect both parties throughout the transfer.
• Ongoing support: After the transfer, we advise on post-transfer obligations, employment terms, and any restructuring that may be needed — including where ETO reasons may justify changes.
• TUPE insurance cover: If you are on one of our pay-monthly insured services, you can add TUPE cover to protect your business from unexpected claims arising from employee transfers. Please note that TUPE cover can only be added at the start of a policy year, it cannot be added mid-policy once a transfer is already anticipated or underway.

With over 200 HR specialists across the UK, your local HR Dept office is ready to support you. 

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