Business sold? What TUPE protects — and what it does not

A company is sold, a department is handed to a contractor, or cleaning is brought back in house — all of these are covered by TUPE, the Transfer of Undertakings (Protection of Employment) regulations. The principle is simple: employment contracts move to the new employer intact.

When does TUPE actually apply?

GOV.UK describes two kinds of transfer. A business transfer is when a business or part of it moves from one employer to another, including mergers where two companies close and combine into a new one; the identity of the employer must change. A service provision change is when a service done in house — cleaning or workplace catering — is awarded to a contractor, when a contract passes to a new contractor, or when the customer takes the work back in house.

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The size of the business does not matter. The head office can be in another country, but the part of the business that transfers must be in the UK. Two situations fall outside the protection: a contract for the supply of goods for the company's own use, and a contract for a single event or short-term task. Only employees who can be clearly identified as providing the service being transferred are covered.

Must staff be told in advance?

Yes. Before the transfer happens, the employer must tell the trade union or employee representatives that the transfer is happening, when and why; how it will affect staff; whether there will be any reorganisation; and how many agency workers are being used and what work they do. Employers can be penalised if they fail to do this.

Where there is no trade union, the employer must consult other employee representatives. Direct consultation with staff is allowed if the employer has fewer than 10 employees. For transfers completing on or after 1 July 2024, it is also allowed if the employer has fewer than 50 employees or is transferring fewer than 10. Otherwise representatives must be elected, and the election has to be fair: every affected employee is entitled to vote, voting should be secret if possible, and votes counted accurately.

What moves across with you?

The new employer takes over the contract in full: previous terms and conditions, holiday entitlement, collective agreements and continuous employment — the start date stays the same, so continuity is not broken. Liabilities move too: a discrimination claim can be brought against the new employer even though the events happened before the transfer.

Pension rights earned up to the transfer are protected, but the new employer does not have to continue an identical pension scheme. Once the transfer is complete, ask for an up-to-date written statement of employment giving the new employer's name and confirming that terms and conditions have not changed. A P45 may appear simply because tax records are being updated.

Can you refuse to transfer?

You can, but it is costly. Refusing is treated as resigning: normally there is no unfair dismissal claim and no redundancy pay. No notice is required — the employee tells the old or the new employer before the transfer, and employment ends at the point of transfer.

It is different if the transfer makes working conditions significantly worse. In that case the employee can object to the transfer, or resign and claim unfair dismissal.

Can terms be cut or jobs removed afterwards?

The transfer itself cannot be the reason for changing terms, before or after. Before the transfer, the outgoing employer cannot normally align terms with the new company's, even with the employee's agreement. After the transfer, terms can change only for an economic, technical or organisational reason (ETO) involving changes in the workforce or workplace, and the employee has to agree. Improvements are allowed if staff agree; changes cannot normally be imposed.

Redundancy follows the same logic. Nobody can be made redundant simply for having been transferred. Where redundancy is driven by an ETO reason involving changes in the workforce, the normal rules on fair dismissal apply and a redundancy payment may be due. Collective agreements from before the transfer continue to apply; the new employer can renegotiate them after one year, and only if the change is not less favourable.

What information about you is handed over?

The outgoing employer must hand over employee liability information at least 4 weeks before the transfer: name, age, main details of employment, disciplinary action and grievances in the last 2 years, legal action against the employer in the last 2 years, and claims the employer thinks may be raised.

What if the old employer is insolvent?

If the business is closing down, employees are unlikely to be protected. If it is being rescued and transferred, TUPE normally applies. Money owed can be claimed either way; in a protected transfer the new employer pays whatever is left after employees have been paid from the government's National Insurance fund. Pay and other terms can be reduced if that prevents job losses, but only by agreement with representatives, and never below the National Minimum Wage.

Where can you get help?

Acas, the Advisory, Conciliation and Arbitration Service, gives free confidential advice on employment rights. Employees can also contact Citizens Advice or a union representative. ONLYWAY NEWS suggests keeping the transfer correspondence and the written statement you are issued: those documents later prove continuity of service and the terms you started with.