TUPE: An Employer’s Guide to Staff Transfers

Staff transfers can be one of the most complex challenges for UK businesses to navigate. Whether your organisation is acquiring another business, outsourcing services or restructuring, understanding your obligations under TUPE (transfer of undertakings protection of employment regulations) is essential to protecting your workforce and remaining compliant with UK employment law.

What is in this factsheet?

When you download the factsheet, you’ll get:

• Glossary of TUPE terms
• A TUPE compliance checklist
• An employee communications framework

What is TUPE?

TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations, is UK legislation that safeguards employees when a business or service changes hands. This acronym reflects the legislation’s two core functions:

• Transfer of Undertakings – when a business, service or function changes ownership or responsibility.
• Protection of Employment – ensuring employees’ contracts, pay and rights are preserved in the transfer.

In simple terms, TUPE means that when part or all of a business is sold, outsourced or merged with another company, the employees attached to that part of the business usually transfer automatically to the new employer on the same terms and conditions. The aim of the legislation is to preserve continuity of employment and minimise disruption to staff.

Its primary purpose is to ensure that employees’ rights, pay and terms and conditions of employment are protected during a relevant transfer.

It’s important to keep in mind that it applies to nearly all UK-based employees, including full-time, part-time and fixed-term workers.

Key points of TUPE 

The Transfer of Undertakings (Protection of Employment) Regulations 2006, implements European law into UK legislation. While the legislation was introduced in 2006, the regulations have been updated by various statutory instruments to reflect changes in case law and Brexit-related adjustments.

Some key points of transfer of undertakings protection of employment regulations include:

• Automatic Transfer: Employees assigned to the business or service being transferred automatically become employees of the new employer.
• Continuity of Employment: The transferring employees retain their original start date and accrued benefits, including holiday entitlements and pension rights (with some exceptions).
• Protection Against Dismissal: Employees may be dismissed during or after a TUPE transfer for an “economic, technical or organisational” (ETO) reason. However, employees cannot be dismissed solely because of a TUPE transfer.
• Duty to Inform and Consult: Employers must provide information to affected employees and consult with them in advance of the transfer.

It’s important to keep in mind that failing to comply with TUPE can expose businesses to legal claims and significant financial penalties.

When does TUPE apply?

TUPE applies in two main types of transfers:

• Business transfers: When a business (or part of it) is sold, gifted or otherwise changes ownership.

Example: Company A sells its cleaning division to Company B; employees assigned to that division transfer to Company B.

• Service provision changes: When a service previously carried out in-house is outsourced to a contractor, when an outsourced service is brought back in-house, or when the service is reassigned to a new contractor.

Example: A company outsources its catering services to an external provider; the catering staff usually transfer to the contractor.

For TUPE to apply, the business or service being transferred must retain its identity and the employees must be “assigned” to the organised grouping of resources transferring.

When doesn’t TUPE apply?

While TUPE is broad in scope, there are situations where it doesn’t apply:

• Share transfers: If a company’s shares are sold to a new owner but the company itself remains the same legal entity,  transfer of undertakings protection of employment regulations aren’t triggered because the employer of staff hasn’t changed.
• Asset-only sales: If a business sells only its equipment or premises without transferring employees or a functioning service, it usually doesn’t apply.
• Short-term service contracts: It might not apply to one-off contracts for a single event or short-term service that isn’t ongoing.
• Transfers outside the UK: Transfer of undertakings protection of employment regulations apply only to employees who ordinarily work in the UK at the time of the transfer.

Planning for a staff transfer

Effective planning is critical to ensure compliance with the Transfer of Undertakings (Protection of Employment) Regulations. The following steps outline the key stages employers should follow:

1. Decide the transfer date

Establish a clear transfer date at the outset. This will form the foundation for all planning, communication and compliance timelines.

2. Gather and provide employee liability information (ELI)

At least 28 days before the transfer, the outgoing employer must provide the incoming employer with Employee Liability Information, including:

• The identity and age of each employee.
• Employment terms and conditions.
• Details of any disciplinary or grievance actions within the last two years.
• Any current or potential legal claims.
• Relevant collective agreements.

3. Identify risks and agree on liabilities

Both parties should identify financial and legal risks, such as accrued holiday pay, bonuses, or ongoing grievances. You should agree on how liabilities will be managed — whether fully transferred to the incoming employer or shared between both employers. The default here is to pass all liabilities to the incoming employer.

4. Inform and consult employees

Employers have a legal duty to inform and where appropriate, consult with affected employees or their representatives before a transfer. This duty applies to both the outgoing and incoming employer. Employers must inform and consult affected employees (and their representatives, if applicable) of the “measures” or potential changes to the employees’ terms.

You must provide information about:

• The fact that the transfer will take place, when and why.
• The legal, economic and social implications of the transfer.
• Any measures you expect to take that will affect employees.
• The identity of the new employer.

Consultations must be conducted with enough time to allow genuine consultations.in  in a genuine and timely manner. Communication should be clear and consistent to minimise uncertainty and maintain engagement.

5. Prepare transfer documentation

Draft and issue formal transfer letters confirming the details of the transfer, the effective date, and any changes or assurances regarding employment terms.

6. Complete the transfer and onboard employees

On the agreed transfer date:

• Ensure a smooth transition of employment, payroll, and HR records.
• Onboard employees to the new organisation, maintaining their existing terms, benefits, and continuity of service.
• Review and align inherited obligations such as collective agreements, pensions, and restrictive covenants.

If employees do not want to transfer

Under the legislation, employees can’t be forced to transfer and they have the right to object in writing.

 If an employee objects:

• Their employment with the outgoing employer ends on the transfer date.
• They are not entitled to redundancy pay or notice pay unless they can show that the transfer involved a substantial change to their working conditions to their detriment.

Transferring employees

The practical aspects of transferring employees under the regulations include:

• Payroll: Employees’ pay, tax codes and benefits continue seamlessly under the new employer.
• Continuity of Service: The transfer doesn’t break employees’ length of service for purposes such as redundancy or unfair dismissal rights.
• Pensions: There is no legal obligation to keep employees under the same pension provider. Employer and employee contributions must remain the same as their entitlements under the transferor.
• Collective Agreements: Terms agreed in collective bargaining remain binding after the transfer.
• Leave and other benefits: These should not be paid out as the employment is continuous. All entitlements must be transferred to the new employer.

After a transfer

Post-transfer, the new employer inherits the employees’ existing contracts and obligations. 

Key responsibilities include:

• Honouring all contractual terms and benefits.
• Managing ongoing grievances or disciplinary processes that began before the transfer.
• Communicating any future organisational changes clearly and lawfully.
• Supporting employee integration into the new business culture.

Changing a contract after TUPE

One of the most common challenges post-transfer is adapting inherited contracts to align with the new employer’s policies or operational needs. TUPE generally prohibits changing an employee’s contract if the sole or principal reason is the transfer itself.

However, changes may be lawful if they are:

• For an economic, technical or organisational (ETO) reason:
  For example, restructuring roles to improve efficiency or responding to financial pressures.
• Agreed by both parties:
  If an employee consents to a change that benefits them or is not connected to the transfer.

What happens if an employer is insolvent?

TUPE will no longer apply if the business has ceased trading and its assets are being liquidated prior to the transfer date, as there’s no longer an undertaking to transfer.

However, where the company is in administration and the business continues trading, TUPE can still apply. Some debts (like unpaid wages and holiday pay) may be covered by the government’s National Insurance Fund rather than the new employer.

The transfer cannot be rushed to take place in less than 28 days of receiving the ELI, even to align with the insolvency date.

Make staff transfers stress-free with Employment Hero

Managing a TUPE transfer can be complex,  but you don’t have to navigate it alone. At Employment Hero, we make HR compliance simple by giving you the tools to stay organised and protect your workforce every step of the way.