Answers · UK 2025/26

What is TUPE and what rights do employees have during a business transfer?

TUPE (Transfer of Undertakings, Protection of Employment) automatically transfers employees to a new employer with their existing terms, pay, continuous service, and most contractual rights preserved, when a business or part of it is sold or a service contract changes provider. Dismissal for a reason connected to the transfer is automatically unfair unless there is a genuine economic, technical, or organisational (ETO) reason.

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The Transfer of Undertakings (Protection of Employment) Regulations, commonly known as TUPE, protect employees' terms and conditions when the business they work for is sold, merges, or when a service contract (such as outsourced cleaning, catering, or IT support) moves from one provider to another. **When TUPE applies** TUPE covers two main scenarios: (1) a "business transfer," where a business or part of a business changes ownership, and (2) a "service provision change," where a service is outsourced, brought back in-house, or moved between contractors, provided there is an organised grouping of employees dedicated to that service. **Automatic transfer of employment** When TUPE applies, affected employees automatically transfer to the new employer on their existing terms and conditions -- there is no need for new contracts to be signed, and the employees do not need to consent individually (though they can choose to object and resign, in which case they are treated as having resigned rather than being dismissed). **What transfers** Continuous service (important for calculating redundancy pay and unfair dismissal qualifying periods), pay, hours, holiday entitlement, and most other contractual terms all transfer unchanged. However, some occupational pension rights are treated differently under TUPE and do not automatically transfer in the same way (the new employer only needs to offer a minimum level of pension provision, not necessarily match the old scheme exactly). **Automatic unfair dismissal protection** Dismissing an employee where the sole or principal reason is the transfer itself is automatically unfair, UNLESS the employer can show an Economic, Technical or Organisational (ETO) reason entailing changes in the workforce -- for example, genuine redundancies needed because the new combined business has duplicate roles. **Worked example** A cleaning contract for an office building moves from Company A to Company B when the contract is retendered. The cleaners who were dedicated to that building transfer automatically to Company B under TUPE, keeping their existing pay, holiday entitlement, and length of service intact, even though they now work for a different employer with a different name on their payslip. **Consultation requirements** Both the outgoing and incoming employer have legal obligations to inform and, where changes are proposed, consult with affected employees (or their representatives) about the transfer, typically well in advance of the transfer date -- failure to properly consult can result in compensation claims of up to 13 weeks' pay per affected employee. **Changing terms after a TUPE transfer** The new employer generally cannot change transferred employees' terms and conditions if the reason is connected to the transfer itself, even with employee agreement, for a period after the transfer -- though changes for genuine ETO reasons or entirely unconnected reasons (e.g. a routine annual pay review that would have happened anyway) are permitted.