Comparison Guide · 2026-07-10
TUPE Transfer vs Redundancy UK 2026
When a business or a service contract you work on changes hands, two very different outcomes are possible: a TUPE transfer, which automatically moves you to the new employer on your existing terms and preserves your continuity of service, or redundancy, which ends your employment and (subject to eligibility) triggers a statutory or contractual payment. Employers cannot simply choose whichever is cheaper — TUPE applies automatically when its legal conditions are met, and dismissing someone purely to avoid a transfer is unlawful. Understanding which situation you are actually in changes what you are entitled to.
At a Glance
| Feature | TUPE Transfer | Redundancy |
|---|---|---|
| What happens to your job | Automatically moves to the new employer on existing terms | Ends — the role no longer exists |
| Continuity of service | Preserved in full, as if always employed by the new employer | Ends, though it counts toward calculating your redundancy pay |
| Payment triggered | None automatically — you keep working and being paid as before | Statutory redundancy pay (capped at £751/week, max £22,530 for 2026/27), plus any enhanced contractual amount |
| Tax treatment | Not applicable — pay continues as normal, taxed as usual earnings | First £30,000 tax-free; excess taxed as income (employer NI applies above £30,000 from April 2025) |
| Pension continuity | Minimum statutory pension access required, may be less generous than before | Ends with employment; you keep your accrued pension pot |
| Consultation requirement | Employer must inform and consult on the transfer itself | Employer must consult on ways to avoid or reduce redundancies (collective rules apply at 20+ proposed redundancies) |
| Can you object? | Yes, but objecting usually ends employment without redundancy pay unless terms change materially | Not applicable — the dismissal is the redundancy |
When a TUPE Transfer Applies
- A business, or a distinct part of it, is sold or otherwise changes ownership as a going concern
- A service contract — such as cleaning, catering, IT support or facilities management — moves from one contractor to another, or is brought in-house
- The employees who worked on the transferring activity are identifiable and organised around it, meeting the legal tests for an "organised grouping"
When Redundancy Applies Instead
- The employer's need for employees to do work of a particular kind has genuinely reduced or ceased, with no transfer to another employer involved
- A workplace or department is closing down entirely, rather than its activities continuing elsewhere under new ownership
- A new employer, after a TUPE transfer, needs to reduce headcount for a genuine economic, technical or organisational reason, some time after the transfer itself
What TUPE Actually Protects — and What It Does Not
TUPE's core protection is continuity: your contract of employment transfers automatically, on the same terms and conditions, with your existing length of service preserved as if you had always worked for the new employer. This matters for far more than sentimental reasons — it affects your qualifying service for unfair dismissal claims, notice entitlement, and any future redundancy calculation, all of which reset to zero if continuity is broken.
What TUPE does not guarantee is that everything stays identical forever. The new employer can, after the transfer, propose changes for genuine economic, technical or organisational reasons — including restructuring roles or, in some cases, making genuine redundancies — provided the transfer itself is not the real reason for the change. Pension provision is a notable gap: while the new employer must offer access to some pension scheme with a minimum contribution level, this can be materially less generous than a legacy defined benefit scheme the employee previously enjoyed, and TUPE does not require like-for-like replication of pension benefits.
Worked Example: Outsourced Contract Changing Hands
A 45-year-old employee has worked for eight years on a facilities contract that their employer has just lost to a rival supplier, earning £600 a week.
Under a TUPE transfer, their employment moves automatically to the new supplier on the same pay, holiday and job role, with their eight years of continuous service carried over intact. They keep working uninterrupted and receive no payout, because their employment has not ended — it has simply changed hands.
If instead the contract ends with no transfer — for example, the client brings the work in-house with entirely new staff and no organised grouping transfers — and their employer cannot redeploy them, this is a genuine redundancy. At age 45 with 8 full years of service and £600 weekly pay (below the £751 cap), they would receive 8 × 1.5 weeks × £600 = £7,200 in statutory redundancy pay, entirely tax-free because it is well under the £30,000 threshold.
Frequently Asked Questions
What does TUPE stand for and what does it do?
If my employer sells the business, do I automatically keep my job under TUPE?
Can the new employer make me redundant straight after a TUPE transfer?
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Does TUPE protect my pension?
How is redundancy pay calculated if I am dismissed instead of transferred?
Is redundancy pay tax-free?
Can I refuse a TUPE transfer and claim redundancy instead?
Does my continuity of service reset when I TUPE transfer?
What is the difference in employer consultation obligations?
Which gives me better financial protection — TUPE or redundancy?
Key Sources
Related Comparisons
Statutory Redundancy Pay vs Contractual Redundancy Pay,Settlement Agreement vs Redundancy Pay