TUPE Explained: What Happens to Staff When a Business Changes Hands

If you're buying a business, taking over a contract or bringing a service back in-house, TUPE decides who comes with it. It applies whatever the size of the business, so it's not just a big-company problem.

When TUPE applies

GOV.UK describes two kinds of protected transfer:

Type	What it covers	Example
Business transfer	A business or part of one moves from one employer to another, including a merger where two companies combine into a new one	You buy a competitor's shop and its staff
Service provision change	A service moves to a contractor, between contractors, or back in-house	You replace your in-house cleaner with a cleaning company

It doesn't cover a contract for supplying goods for your own use, like a restaurant switching food suppliers, or a single event or short-term task. And only employees clearly identified as providing the service that's moving are protected. GOV.UK's example is a courier picked up on an ad hoc basis by different couriers, who wouldn't be protected.

The insight most buyers miss: share sales

GOV.UK says the identity of the employer must change for a business transfer to be protected under TUPE. If you buy the shares of a limited company, the company stays the employer, so TUPE doesn't come into it: the staff simply carry on employed by the same company under its new owner. An asset purchase, where the business itself moves from one employer to you, is the kind of deal GOV.UK's business transfer definition describes, so that's where you plan for TUPE.

What transfers to the new employer

• All existing terms and conditions of employment
• Holiday entitlement
• Continuous employment, so start dates stay the same
• Collective agreements made before the transfer
• The previous employer's failures, so a discrimination claim from before the transfer can be brought against the new employer

Pension rights earned up to the transfer are protected, but the new employer doesn't have to continue an identical pension.

Changing terms after a TUPE transfer

This is where most disputes start. Before the transfer, the old employer normally can't change a transferring employee's terms to match the new company's, even if the employee agrees. After it, the new employer can't change terms if the reason is the transfer itself.

Changes are possible for an economic, technical or organisational (ETO) reason involving changes in the workforce, such as redundancies, and the employee needs to agree. Improvements are fine if employees agree, for example harmonising holiday upwards. Collective agreement terms can be renegotiated after 1 year if the change isn't less favourable to the employee.

Informing and consulting

Before the transfer, employers must tell the trade union or employee representatives that it's happening, when and why, how it'll affect staff, whether there'll be any reorganisation and how many agency workers are being used. They must also consult about anything that affects employees. Employers can be penalised if they don't.

Your situation	Who you inform and consult
Recognised trade union	The union representatives
No union but employee representatives	Those representatives
No representatives, fewer than 50 employees or fewer than 10 transferring (transfers completing on or after 1 July 2024)	Employees directly
None of the above	Hold an election for employee representatives

The 4-week information deadline

The outgoing employer must give the new employer information about the transferring employees at least 4 weeks before the transfer. That normally includes:

1. Name and age
2. Main details of employment
3. Disciplinary action and grievances in the last 2 years
4. Legal action by employees in the last 2 years, and any the employer thinks might be raised

Employees who don't want to transfer

An employee can refuse to work for the new employer. GOV.UK says that's the same as resigning, so they won't normally be able to claim unfair dismissal or redundancy pay, and no notice is needed: employment ends at the transfer. If their working conditions would be significantly worse because of the transfer, they can object, or resign and claim unfair dismissal.

Remote staff and employees abroad

Employees of a UK business who are based outside the UK can still be protected. In a business transfer, if the undertaking is in the UK, someone who spends most of the week abroad is likely to be covered. In a service provision change, there must be an organised group of employees in England, Scotland or Wales. GOV.UK's example: a website maintenance team with one member working from home overseas is likely protected, but a team that works entirely from abroad isn't.

Redundancy and insolvency

The new employer can't make people redundant just because they transferred, though redundancy for an ETO reason is still possible with the normal rules. With an insolvent business that's closing down, TUPE protection is unlikely, but it'll normally apply if the business is rescued and taken over, and terms can be changed then to prevent job losses if representatives agree.

If you're buying a business, get the employee information early and check the contracts with UK HR support for small businesses. My guide to what to include in a business contract helps with the sale agreement itself.

My verdict

TUPE isn't optional and it isn't only for big deals. If you're taking over a business's assets or a service contract, assume the people come with it, on their existing terms, and budget accordingly. Ask for the employee information at least 4 weeks out, consult before the transfer, and don't try to harmonise contracts just because of the deal, because that's the change TUPE stops.

Frequently asked questions

What does TUPE stand for?

Transfer of Undertakings (Protection of Employment), the regulations that protect employees when a business or service moves to a new employer.

Does TUPE apply to small businesses?

Yes. GOV.UK says the size of the business doesn't matter.

Does TUPE apply to a share sale?

Not usually. For a business transfer the identity of the employer must change, and in a share sale the company stays the employer.

Can a new employer change terms after TUPE?

Not because of the transfer itself. Changes need an economic, technical or organisational reason involving changes in the workforce, and the employee's agreement.

When must employee information be provided under TUPE?

The outgoing employer must give it to the new employer at least 4 weeks before the transfer.

Can an employee refuse a TUPE transfer?

Yes, but it's treated like resigning, so they normally can't claim unfair dismissal or redundancy pay.