The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, protect staff when the organisation or activity they work in moves to a new owner or provider. Employees move across automatically on their existing terms, with continuous service intact, whether the firm is a multinational or a ten-person company.
The rules are easy to underestimate. They can be triggered by an asset sale, an outsourcing deal or a switch of cleaning supplier, and failing to inform and consult the workforce can cost up to 13 weeks' uncapped gross pay for each affected employee.
Summary in brief:
- What TUPE is: UK law that automatically transfers employees — and their existing terms — to a new employer when a business or service activity changes hands.
- When it applies: Business transfers (asset sales, mergers) and service provision changes (outsourcing, insourcing, contractor switches), regardless of the size of the employer.
- Key employee rights: Terms and conditions, continuous service, accrued entitlements and protection from dismissal all carry across to the new employer on day one.
- Employer obligations: Both the outgoing and incoming employer must inform and consult employee representatives before the transfer date; the outgoing employer must send employee liability information at least 28 days in advance.
- What is changing: The Employment Rights Act 2025 introduces significant reforms from 1 January 2027, including reducing the unfair dismissal qualifying period to six months and restricting fire-and-rehire practices.
What Are the TUPE Regulations?
TUPE is the piece of UK law that implements the EU Acquired Rights Directive, and it covers undertakings of every kind — from shops to software contracts. It was retained after Brexit and has been amended several times, most recently for transfers from July 2024. The full text of the Transfer of Undertakings (Protection of Employment) Regulations 2006 is published on legislation.gov.uk.
The core principle is straightforward: when a relevant transfer of an undertaking takes place, the employment of the people assigned to that part of the business passes from the outgoing employer (the transferor) to the incoming one (the transferee). Nobody needs to resign and be rehired. The new employer steps into the shoes of the old one.
The regulations apply across England, Scotland, Wales and Northern Ireland, provided the undertaking is situated in the UK immediately before the transfer.
When Does TUPE Apply?
The regulations apply to two types of situation. Neither depends on the size of the business.
Business Transfers
A business transfer happens when a company, or part of one, moves to a new owner and keeps its identity. Typical examples are an asset purchase or a merger that creates a different legal entity. The question is whether the same economic activity carries on under different ownership.
Service Provision Changes
A service provision change happens when a client outsources an activity, brings it back in-house, or moves it from one contractor to another. The rules only apply if an organised grouping of employees mainly carries out that activity for the client, and the tasks stay broadly the same. A common example is a local authority outsourcing its cleaning or catering services to a private provider — or bringing them back in-house — including large public sector bodies such as the NHS.
Arrangements for a single event, a short-term task or the supply of goods are excluded.
Good to know
A share sale is not covered by TUPE because the legal entity stays the same. Staff remain with that company, along with every existing debt and claim.
/ | Business Transfer | Service Provision Change |
|---|---|---|
Trigger | Sale of assets or business, merger creating a new entity | Outsourcing, insourcing, or re-tendering of a service activity |
Key condition | The economic activity carries on with its identity preserved | An organised grouping of employees mainly carries out the activity for one client |
Size threshold | None | None |
Excluded situations | Share sales (same legal entity) | Single events, short-term tasks, supply of goods only |
Public sector | Applies unless a specific reorganisation exemption applies | Frequently triggered, e.g. NHS, local authority outsourcing |
What Rights Do Employees Have?
On the transfer date, the transferee inherits almost everything connected with the employees transferred. They keep:
- Their terms. Pay, hours, location and contractual benefits all carry across.
- Continuous service. Length of service counts for redundancy pay and other statutory entitlements.
- Accrued entitlements. Holiday, arrears of wages and existing bonus or commission schemes.
- Collective agreements. Arrangements with a recognised trade union that cover them.
- Protection from dismissal. Being dismissed because of the handover is automatically unfair, unless there is a valid workforce reason.
- A voice. Their representatives must be told what is happening before it happens.
Past failures by the old owner also move across — such as unpaid wages or discrimination claims. The main exception is occupational pensions. Benefits earned up to the transfer date are protected, but the new employer does not have to offer an identical scheme. Where people had access to an occupational pension, it must provide a minimum level of pension provision, usually by matching employee contributions up to 6% of basic salary.
Anyone who would rather not move can object. Their employment then ends without a dismissal, unless the move involves a substantial change in working conditions to their material detriment.
What Are the Duties to Inform and Consult?
Both employers must inform appropriate representatives long enough beforehand to allow meaningful discussion. These are union reps where a union is recognised, or elected employee reps. They must be told:
- The date and reasons for the transfer
- The legal, economic and social implications
- Any measures planned (such as new shift patterns or relocations)
- Details of any agency workers involved
Where measures are planned, the employer must discuss them with a view to seeking agreement. For transfers on or after 1 July 2024, GOV.UK guidance confirms that firms with fewer than 50 staff, or moving fewer than 10 people, can speak to employees directly where no representatives are in place.
Important
Failure to inform or consult can lead to an employment tribunal award of up to 13 weeks' uncapped gross pay per affected person. Transferor and transferee can be jointly liable, so buyers should negotiate an indemnity in the sale agreement.
Employee Liability Information
The transferor must also send employee liability information (ELI) to the transferee at least 28 days before the transfer. This covers:
- Each person's identity and age
- Their written statement of particulars
- Disciplinary and grievance records from the last two years
- Any claims brought or expected
If the details are late, wrong or missing, Regulation 12 of the TUPE Regulations provides that the tribunal will normally award a minimum of £500 per employee affected — with no upper cap on total liability.
Manage your TUPE paperwork with Youtrust
Send updated contracts and letters to multiple employees at once
Can You Change Terms or Dismiss Staff After a Transfer?
This is where most disputes arise. A change to terms is void if the sole or principal reason for it is the transfer itself — even with the individual's agreement. Harmonising salaries with your existing team purely to save costs is not enough.
Watch out
Harmonising pay scales across an existing and transferred workforce, purely to reduce cost, has no valid legal basis under TUPE. Even when employees sign an amended contract, changes made for this reason remain void and can be challenged at tribunal.
Changes are possible if they improve the deal, if the contract already permits them, or if there is an economic, technical or organisational (ETO) reason entailing changes in the workforce. That means fewer roles, different job functions or, in some cases, a different location. A buyer that closes a site and relocates the team may have an ETO reason. A buyer that simply wants everyone on one salary scale does not.
Dismissals follow the same logic: with an ETO reason, ending someone's employment can be fair — for example as a redundancy. If 20 or more redundancies are planned at one establishment within 90 days, collective consultation rules are triggered too.
Are There Exceptions?
A few special cases alter how the rules work:
- Insolvency. Where the transferor is in bankruptcy or liquidation, employees do not automatically transfer and the usual dismissal protection falls away. In other insolvency procedures, some debts are met by the state and terms can be varied more easily.
- Public sector reorganisations. Moving administrative functions between public authorities — for example between government departments — is not a relevant transfer, although government policy normally applies equivalent safeguards.
- Cross-border situations. The undertaking must be situated in the UK beforehand, although people who normally work abroad can still be covered.
What Is TUPE+?
TUPE+ is not a legal term. It describes extra commitments negotiated on top of the statutory rules, usually when public services are outsourced. Examples include a promise that later recruits get terms comparable to those transferred, or that changes are only made through collective agreement. These commitments are contractual rather than statutory, but they are due to be strengthened by law — as explained below.
What Reforms Are Expected in 2026 and 2027?
The Department for Business and Trade ran a call for evidence on the TUPE Regulations from 8 April to 1 July 2026, looking at harmonisation, ETO reasons, pensions and the information process. No proposals had been published at the time of writing, and any reform would need new legislation before it could apply.
Other significant developments come through the Employment Rights Act 2025:
- Unfair dismissal. From 1 January 2027, the qualifying period falls from two years to six months, so far more transferring employees can bring tribunal claims.
- Fire and rehire. From the same date, dismissing staff to impose different terms — including changes to pay, hours, pensions, shift patterns or time off — will be automatically unfair in most cases, significantly limiting harmonisation after a takeover.
- Protective award. Since 6 April 2026, the maximum award for failing to consult on collective redundancies has doubled to 180 days' pay per affected employee. Note: this change applies in England, Scotland and Wales; Northern Ireland, where the matter is devolved, is governed by separate legislation.
- Public sector outsourcing. The Act gives powers to restore and strengthen the two-tier workforce code, putting TUPE+ style safeguards into statutory law.
Our guide to managing organisational change during M&A covers the people side of any deal.
TUPE Checklist for Employers
Whether you are selling, buying or outsourcing, work through this process early:
- Confirm TUPE applies. Identify the relevant transfer and the organised grouping of employees assigned to the activity.
- Plan the timetable. Allow for elections, consultation meetings and the 28-day deadline for employee liability information.
- Inform and consult. Put the required details in writing and keep records of every meeting.
- Review the paperwork. Check salaries, benefits, pension arrangements and PAYE records so you know exactly what you are inheriting.
- Issue fresh paperwork. Send welcome letters and updated statements of particulars once employees have transferred.
Our guides on what a UK employment contract must include and managing employee contract amendments help you get the post-transfer documents right.
Plan Your TUPE Transfer With Confidence
The rules can feel daunting, but their logic is consistent: employees move with their jobs, their terms are protected and both employers must be open with staff before anything changes. Check early whether the rules apply, involve employee representatives, respect every deadline, and keep a close eye on the reforms due in 2027.
Clear, well-organised documents make the whole process smoother for everyone involved. Youtrust keeps every letter and contract signed, dated and easy to find — for the employer and for transferring staff alike.
Sign your TUPE documents with Youtrust
Ready to manage your TUPE paperwork with less friction?
Frequently Asked Questions About TUPE
Does TUPE apply to small businesses?
Yes. The rules cover any employer, whatever its size, even if only one person moves. Smaller firms can speak to staff directly when there are no representatives, which makes the process quicker for the employer.
Can an employee refuse to transfer?
Yes. They can object, and their employment ends on the transfer date. They are not treated as dismissed, unless the move would substantially worsen their working conditions.
How long does TUPE protection last?
There is no fixed limit. A change is void whenever the sole or principal reason is the transfer, even years later — though the link usually becomes harder to prove over time.
What is an ETO reason and when does it apply?
An economic, technical or organisational (ETO) reason is a valid justification for changing terms or making redundancies after a transfer. It must entail changes in the workforce — fewer roles, different functions or a different location. A cost-saving motive alone does not qualify.
Does TUPE apply in Scotland, Wales and Northern Ireland?
Yes. The TUPE Regulations apply across Great Britain — England, Scotland and Wales — and are also extended to Northern Ireland by equivalent legislation. The core protections are the same across all four nations.
What happens to PAYE during a TUPE transfer?
The incoming employer takes on the transferred employees under their own PAYE scheme from the transfer date. In practice, this means notifying HMRC, issuing new payroll references and ensuring continuity of tax codes. The outgoing employer must provide accurate payroll information as part of the employee liability information handover.
