Legal requirements of TUPE

This guide provides general information only. Confirm the legal position for your situation using official sources. Note that some corporate transactions (for example, certain share sales) may be treated differently. 

This guide will outline the core requirements and the steps you will need to take to fulfil them. Depending on the kind of business you run, there may be other requirements to consider; however, this guide will address what is essential to a TUPE.

What is TUPE?

Either your business is changing hands and staff will be working under a new employer, or there is a service provision change.

Employers typically inform employee representatives or trade unions about changes that may occur through a transfer, including any structural reorganisation. If a business employs fewer than ten people and does not have representatives or a trade union, consultation may take place directly with affected employees, in line with statutory requirements.

The following information should be provided to the employee’s representatives:

• the identity and age of affected employees;
• their employment contract information;
• collective agreement information;
• disciplinary action information;
• information on formal grievances made by employees;
• information about any previous or pending legal action against you.

Failure to provide this information can result in penalties under TUPE legislation.

When your business is changing hands

In this case, your business is being transferred from one owner to a new owner, who then becomes the new employer of your staff. This also applies when a business is undergoing a merger, such as when two businesses both close in order to form a new one.

When there is a service provision change

A service provision change usually involves a new contractor; in-house services such as catering are transferred to a new contractor. This also includes situations where a contract ends and responsibility passes to a new contractor. 

Service provision changes are relevant for employee groups such as:

• security staff;
• catering team;
• cleaning staff.

There is a service provision change if:

• the service and related activities provided by the new buyer are the same;
• the service was carried out by an organised grouping that performs what is required on behalf of the client;
• the client is the same under the new buyer.

Implications of meeting the TUPE conditions

In some transfers, both scenarios may be relevant; in others, only one applies. Confirm the position for your situation using official guidance. In either situation, the relevant legal requirements continue to apply.

These include:

• employees who fall within the scope of the transfer typically move to the new employer;
• the terms and conditions of affected employees do not change in connection with the transfer;
• if employees are dismissed for reasons connected to the transfer, they may be able to challenge the dismissal under applicable rules;
• consultation takes place with all employees affected by the transfer. 

The new employer takes on responsibilities including:

• your employee’s terms and conditions of their employment;
• preservation of the employee’s original start date, so they are deemed to have been in continuous employment;
• any currently agreed payments such as redundancy , holiday pay or sick pay;
• any currently agreed arrears of payments such as redundancy , holiday pay or sick pay;
• liabilities such as unfair dismissal;
• collective agreement terms that are part of the employee’s contract with you;
• certain non-employment liabilities, which may include civil claims related to the period before the transfer, depending on the circumstances. 

All statutory and contractual rights of the employee are passed from you to the new buyer. This will also include any liabilities that you are responsible for, such as claims made for discrimination or unfair dismissal. Under pension legislation (separate from TUPE), new employers may need to provide a minimum level of pension provision. Check official guidance to confirm the requirements for your situation. Inform the new employer about any pension rights that your employees currently have.

Determining which staff fall under a TUPE transfer

Organisations typically assess which employees fall within the scope, or if the scope will be transferred to the new employer.

Conditions for a business transfer may include considerations such as:

• whether the employee is on a fixed-term contract;
• whether they are on short-term leave or parental leave.

TUPE is intended to ensure that terms and conditions do not change solely because a business is transferred to a new buyer and employer. It is important to take stock of TUPE law, as failure to properly address the transfer of your employee’s rights can be penalised. Depending on the nature of your transfer, this can be a relatively straightforward process, but you will need to consider whether your employees meet the conditions of a TUPE transfer carefully. Consultation typically involves the employees affected and the organisation’s HR team.