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What Is TUPE?
TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) is UK legislation that automatically transfers employees, along with their existing employment terms and continuity of service, when a business or service they work for changes hands. It applies to both business sales and “service provision changes,” such as outsourcing or switching contractors.
TUPE doesn't just cover business sales; it also applies when a service like cleaning, catering, or security is outsourced, insourced, or moved to a different contractor, even without any change in company ownership.
TUPE at a Glance
| Attribute | Description |
|---|---|
| Legal Basis | Transfer of Undertakings (Protection of Employment) Regulations 2006 |
| Triggers | Business transfer or service provision change |
| Effect on Employees | Automatic transfer with existing terms and continuity of service preserved |
| Dismissal Protection | Transfer-related dismissals are automatically unfair, unless a genuine ETO reason applies |
| Consultation Requirement | Both outgoing and incoming employers must inform and consult affected staff |
| Non-Compliance Penalty | Up to 13 weeks' pay per affected employee for consultation failures |
Why Does It Matter?
TUPE significantly limits an acquiring or incoming employer's flexibility around the transferring workforce. Employees move across automatically, on their existing terms, and cannot simply be dismissed or have their contracts worsened because of the transfer. Getting the information and consultation process wrong exposes both outgoing and incoming employers to real financial penalties.
When Is It Used?
TUPE becomes relevant whenever a company:
- Acquires all or part of another business, along with its employees.
- Wins or loses an outsourced service contract, such as cleaning, catering, or facilities management.
- Brings a previously outsourced function back in-house (insourcing).
A German facilities management company wins a cleaning contract previously held by a different provider at a UK office building. Under TUPE, the cleaning staff assigned to that contract automatically transfer to the new company on their existing pay, holiday entitlement, and length of service, and both the outgoing and incoming employers must inform and consult those employees ahead of the transfer.
Common Misconceptions
No. It also applies to service provision changes, including outsourcing, insourcing, and switching between contractors.
No. Changes are restricted unless there's a genuine economic, technical, or organisational (ETO) reason involving workforce changes.
No. There's no right to pick and choose; all employees assigned to the transferring business or service move across automatically.
No. TUPE doesn't apply to share sales, since the employing legal entity itself doesn't change.
TUPE automatically transfers employees, with their existing terms and continuity of service intact, whenever a business or service changes hands in the UK. Companies involved in acquisitions, outsourcing, or contract re-tenders need to plan for information, consultation, and dismissal-protection obligations well before the transfer date.
Planning a UK transfer or outsourcing?
We'll help you navigate TUPE information, consultation, and dismissal-protection obligations before the transfer date.
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