Checklist: Carrying out a TUPE transfer (UK)

Introduction

This checklist will assist in-house counsel, private practice lawyers and HR professionals with carrying out a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE safeguards the rights of employees during business transfers and service provision changes, as well as setting out key steps for employers to follow during a TUPE transfer. 

This checklist addresses the following steps:

1. Establish whether a TUPE transfer will take place
2. Understand the impact of a TUPE transfer
3. Provide employee liability information
4. Inform and consult with employees

This checklist can be used in conjunction with How-to guide: Overview of employment law (UK) and Checklists: Identifying, reviewing and updating the terms of an employment contract and An employer’s guide to fire and rehire.

The checklist is presented as a list of requirements that can be checked off as they are addressed. At the end of each step, there are explanatory notes corresponding with each requirement in the checklist.

Employers should be aware that the Employment Rights Bill 2024, introduced on 10 October 2024, aims to significantly enhance worker protections in the UK. Key provisions include granting day-one rights for unfair dismissal, paternity, parental, and bereavement leave, changes to sick pay and flexible working rights, protections against zero-hours contracts and restrictions on the use of ‘fire and rehire’ practices. New legislation will be introduced throughout 2025 and 2026. Further information can be found at UK Parliament: Employment rights bill and Employment Rights Bill: factsheets.

Step 1 – Establish whether a TUPE transfer will take place

Step 2 – Understand the impact of a TUPE transfer

Step 3 – Provide employee liability information

Step 4 - Inform and consult with employees

Explanatory notes

Overview

The purpose of TUPE is to protect employees when the business they work for changes hands, or the work they undertake is otherwise transferred to another employer. Under TUPE employees, their employment rights and associated liabilities move from the old employer (transferor) to the new employer (transferee) by operation of law. There are two types of transfers covered by TUPE – business transfers and service provision changes. 

Legal framework

The TUPE regulations originated from Directive 77/187/EEC, commonly known as the ‘Acquired Rights Directive’. In the UK, the rights granted under this Directive were transposed into UK law as TUPE.

Since its inception in 1981, TUPE has undergone several amendments to enhance its effectiveness and adapt to changing circumstances. There is also a body of case law precedent that has developed in relation to TUPE, which can assist with interpretation of the legal requirements.  

Employers should note that there are specific provisions that apply when TUPE is triggered in an insolvency situation (regulations 8 and 9 of TUPE) which are beyond the scope of this checklist. 

Step 1 – Establish whether a TUPE transfer will take place

TUPE applies in two main scenarios – business transfers and service provision changes. When a transfer has triggered TUPE (whether in the business transfer or service provision change context), this is known as a ‘relevant transfer’. The identity of the employer must change for a relevant transfer to occur and TUPE protection to apply. TUPE is therefore not triggered by a share sale, as the employing entity (ie, the limited company) remains the same. Employers should, however, be mindful that TUPE can be triggered by intra-group reorganisations that sometimes take place prior to a share sale. 

Some relevant transfers can be both a business transfer and a service provision change. TUPE can be triggered by less obvious situations, such as the grant of a lease by a landlord where the incoming tenant operates a similar business to that of the outgoing tenant (see, eg, Wood v Caledon Social Club Ltd (Debarred) and another UKEAT/0528/09 for the application of TUPE in property transactions). 

1.1 Understand business transfers

When a business or part of a business changes ownership, TUPE ensures that employees’ rights and obligations transfer to the new employer. This occurs when a business or part of it is sold or otherwise transferred, including merger situations where two or more companies combine.

1.1.1 Identifying a business transfer

When determining whether a transfer qualifies as a business transfer under TUPE, the legal test focuses on whether there is an ‘economic entity’ that retains its identity after the transfer (regulation 3(1)(a) of TUPE). TUPE transfers must be considered on a case-by-case basis; however, key factors to take into account include:

• the nature of the business being transferred;
• whether tangible (eg, buildings, property) or intangible assets are part of the transfer;
• whether the majority of employees move to the new employer;
• whether any customers are transferred;
• the similarity between activities before and after the transfer; and
• if there was any suspension of activities during the transfer process.

1.2 Understand service provision changes 

If a service previously provided by one entity is outsourced, insourced, or transferred to another service provider, TUPE protects the employment rights of affected employees. This happens when: 

• a service provided in-house is awarded to a contractor;
• a contract to provide services to a client ends and is given to a new contractor; or
• a contract to provide services is transferred in-house, having been previously undertaken by a contractor. 

1.2.1 Identifying a service provision change

The following factors are required in order for a service provision change to take place under TUPE (regulation 3(3)(a) of TUPE):

• before the transfer, there must be an ‘organised grouping’ of employees dedicated to performing the relevant activities on behalf of the client;
• the activities carried out by the transferee must be ‘fundamentally the same’ as those performed by the existing team;
• the client (for whom the activities are performed) must remain the same; and
• the activities should not be for a single specific event or a task of short-term duration.

1.3 Identify the transferring employees

Once it has been established that a TUPE transfer will take place, it is necessary to identity which employees will transfer. To make this determination, employers must consider the ‘wholly or mainly assigned’ test. This test assesses the degree of assignment of employees to the transfer by considering: 

• the time spent on the transferring activities; and
• the nature of the duties carried out by employees.

Employers should take a multifactorial approach and consider both the percentage of time worked on the transferred activity and the nature of duties performed. 

Recent case law has suggested that there may be an obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business (see McTear Contracts Ltd v Mr B Bennett and 20 Others and Others, UKEATS/0023/19/SS). 

Step 2 – Understand the impact of a TUPE transfer

TUPE operates as a matter of law. It is not possible for the parties to a transaction, such as a business sale or an outsourcing, to contract out of TUPE or to otherwise agree to opt out of or water down any aspects of TUPE. The impact of a TUPE transfer is that the transferring employees will automatically become employees of the transferee on the transfer date, even if the transferee and transferor do nothing. 

TUPE also has a number of significant impacts on the employment relationship between the transferring employees and the transferee. 

2.1 Impact on continuity of employment

Transferring employees will remain employed under their existing contracts as if the transferee was their original employer (regulation 4 of TUPE). This means that the transferring employees retain their existing terms and conditions of employment, including:

• contractual terms, such as salary, working hours and contractual benefits; and
• accrued rights relating to length of service, holiday entitlement and other benefits.

Employers should note that the impact of TUPE on pension entitlements can be complex, particularly when dealing with transfers in or out of public sector employers, and specialist advice should be sought. 

2.2 Protection against detrimental changes to terms of employment

TUPE prohibits the transferee from making adverse changes to employees’ terms and conditions solely due to the transfer (regulation 4(4) of TUPE). 

Any changes to the employment contract solely due to the transfer are void unless they are for an economic, technical, or organisational reason (ETO) involving workforce changes. 

ETO reasons include:

• economic reasons, such as essential cost-saving requirements;
• technical reasons such as using new processes or equipment; and
• organisational reasons that require making changes to the structure of the organisation.

Harmonisation of employment terms with an existing workforce is generally not considered an ETO reason (eg, see Manchester College v Hazel [2012] UKEAT/0642/11), meaning that employers in sectors where TUPE transfers are common (such as the rail industry) often have different terms and conditions for different groups of employees. 

2.3 Protection against dismissal 

Employees have enhanced protection against unfair dismissal before and after a TUPE transfer (regulation 7 of TUPE). As a result, an employer’s ability to dismiss employees fairly when there is a TUPE transfer involved is limited.

Any dismissal where the sole or principal reason for the dismissal is the TUPE transfer will be automatically unfair, meaning that an employment tribunal will not need to consider the normal unfair dismissal rules in order to conclude that the dismissal was unfair.

Employers may, however, be able to argue that a dismissal was potentially fair if they can establish that it was due to a genuine ETO reason. Whilst this does potentially enable employers to, for example, make redundancies following a TUPE transfer, it should be noted that the ETO defence can be difficult to rely on and is often narrowly interpreted by courts and tribunals. If an employer is able to establish an ETO reason, the normal rules of unfair dismissal will still apply (see How-to guide: How to carry out a fair termination of employment).

2.4 Ability of employees to opt out of transfer

Employees can object to becoming employed by the transferee, which will terminate their contract of employment with the transferor on the transfer date without any deemed dismissal by either transferee or transferor (regulation 4(7) of TUPE). 

Step 3 – Provide employee liability information

Regulation 11 of TUPE requires transferors to notify transferees of employee liability information (ELI) prior to a relevant transfer.

3.1 Content of employee liability information

ELI includes the identity and age of the employees, particulars of their employment, disciplinary and grievance procedures, court or tribunal cases, and information on any collective agreement. The full list of ELI can be found at regulation 11(2) of TUPE.

3.2 Ensure compliance with notification timeframe

ELI must be provided by the transferer to the transferee at least 14 days before the transfer (regulation 11(3) of TUPE) and any changes to the ELI after initial notification must also be communicated to the transferee (regulation 11(5) of TUPE).

In business sales it is common practice for the parties to agree to provide more extensive information about employees at an earlier stage in the sale process than legally required by TUPE. In such cases the information is often provided initially with employee names redacted with the full, up-to-date details provided 14 days prior to the transfer as required by TUPE.

Step 4 – Inform and consult with employees 

Employers involved in a TUPE transfer have an obligation under regulation 13 of TUPE to inform and consult with ‘affected employees’ in relation to a TUPE transfer. Affected employees include both transferor and transferee employees who may be impacted by the transfer or related measures, regardless of whether they are assigned to the specific organised grouping of resources or employees involved in the transfer. The obligation to inform and consult can therefore impact both transferees and transferors and references to ‘employer’ in this step 4 are to the transferee and/or transferor as applicable.

A failure to comply with the obligation to inform and consult with affected employees can result in an award of up to 13 weeks’ pay for each affected employee, for which the transferor and transferee are jointly and severally liable. 

4.1 Identify or elect appropriate representatives

Subject to the exceptions for 'micro-businesses set out below, employers must inform and consult with ‘appropriate representatives’ of affected employees. These may be:

• representatives of an independent trade union recognised by the employer (if applicable); or
• where there is no trade union, employee representatives appointed or elected by the affected employees.

Different rules apply for so-called 'micro-businesses'. Where the employer either employs less than 50 employees in total, or there are less than 10 transferring employees, and there are no existing elected representatives already in place (and the employer has not invited elections), the employer can consult directly with the affected employees (regulation 13A of TUPE).

4.2 Duty to inform

The employer must provide specified information to the representatives of the affected employees in good time before the relevant transfer. TUPE does not prescribe any specific timescales; however, if the duty to consult is triggered, certain information must be provided early enough to enable the employer to fulfil its duty to consult with employees. 

The information that must be provided includes:

• the fact that the transfer will occur, the proposed date, and the reasons behind it;
• legal, economic and social implications of the transfer for affected employees;
• any ‘measures’ envisaged by the employer in connection with the transfer. Measures are changes or proposed changes that the employer plans to make following the TUPE transfer, for example, a change to working arrangements, or proposed redundancies. If no measures are planned, the employees must be informed that there are no measures; and
• if the employer is the transferor, measures envisaged by the transferee for affected employees who will become their employees after the transfer.

A transferee to a TUPE transfer must provide relevant information to the transferor, including, in particular, information about any measures to enable the transferee to fulfil their duties towards employees. 

4.3 Duty to consult

The duty to consult applies in relation to any employees who will be affected by any envisaged measures (regulation 13(6) of TUPE). When the duty to consult has been triggered the employer should carry out consultation with a view to seeking the agreement of the affected employees to the proposed measures and should give consideration to any representations made by the affected employees before reaching a final decision.

It is common in practice for the parties to agree that the transferee can play a role in consultation prior to the transfer, notwithstanding that the affected employees remain employed by the transferor until the transfer date. This is because it is most often the transferee that envisages measures post-transfer and is therefore best placed to participate in the consultation process prior to the transfer. 

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