What is TUPE Transfer?

Full Definition

TUPE -- the Transfer of Undertakings (Protection of Employment) Regulations 2006 -- automatically transfers employees assigned to a business, or a defined part of it, to the new owner whenever that business (or an identifiable part of it) is sold or changes hands, and also applies to "service provision changes," such as when a contract for outsourced services like cleaning, catering, or IT support moves from one contractor to another, or is brought in-house. Rather than employment ending with the old employer and a fresh contract being offered by the new one, TUPE preserves employees' existing terms and conditions, pay, and continuity of service exactly as they stood immediately before the transfer, as if the new employer had always employed them, and any dismissal connected to the transfer is automatically unfair unless the employer can show an economic, technical, or organisational reason entailing changes in the workforce. Both the outgoing employer (the transferor) and the incoming employer (the transferee) have legal duties to inform and, where measures affecting the transferring employees are proposed, consult with employee representatives well before the transfer takes place, broadly mirroring the collective consultation obligations that apply to larger redundancies, and a failure to properly inform and consult can itself lead to a Tribunal claim for compensation of up to 13 weeks' pay per affected employee. After the transfer, the new employer generally cannot unilaterally worsen the transferred employees' terms and conditions purely because of the transfer itself, even with the employee's agreement, for a period during which the transfer remains the sole or principal reason for the change, though genuine business reasons unconnected to the transfer can still justify later changes. Worked example: a hospital outsources its cleaning contract from Company A to Company B; under TUPE, the cleaning staff employed by Company A on that contract automatically become employees of Company B on the same pay, hours, and continuity of service they had before, without any break in their employment record -- Company B cannot simply offer them new, less favourable contracts as a condition of continuing to work on the hospital site, and if Company B later wants to make some of the transferred cleaners redundant for a genuine organisational reason, it must still follow fair redundancy and, if 20 or more roles are affected, collective consultation procedures in the usual way.

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