TUPE transfers explained – How to manage employees during business sales

TUPE transfers are a critical consideration during business sales and restructures, especially when employees are being transferred to a new employer. If you’re navigating this process, understanding your legal obligations is essential. For tailored guidance, explore our Business Employment Law services.

In England and Wales, the Transfer of Undertakings (Protection of Employment) Regulations – commonly known as TUPE – protects employees when a business or part of a business changes hands. TUPE transfers are designed to preserve employees’ existing terms and conditions of employment, and mishandling this legal process can result in significant liabilities for both buyers and sellers.

What is a TUPE transfer?

TUPE transfers occur when a business, or part of it, is sold or outsourced. These regulations ensure that employees automatically move to the new employer with their existing employment contracts intact. This includes salary, holiday entitlement, and continuity of service.

• Applies to business sales, mergers, and service provision changes.
• Covers employees working in the relevant part of the business.
• Protects against dismissal solely due to the transfer.

For further legal context, the UK Government outlines TUPE legislation in full on their official guidance page.

Types of transfers covered by TUPE

There are two main types of transfers under TUPE regulations:

1. Business transfers – where a business or part of it moves from one employer to another.
2. Service provision changes – when a service contract is outsourced, brought in-house, or moved to a new provider.

In both scenarios, the incoming employer inherits the legal obligations of the outgoing employer for the affected employees. This includes disciplinary records, holiday allowances, and pending grievances.

Employer responsibilities under TUPE

During TUPE transfers, both the outgoing and incoming employers have specific responsibilities:

Outgoing employer (Transferor):

• Inform and potentially consult with affected employees or their representatives.
• Provide employee liability information to the incoming employer.
• Ensure accurate employee records are shared.

Incoming employer (Transferee):

• Maintain employees’ existing terms and conditions post-transfer.
• Honour collective agreements made by the outgoing employer.
• Ensure no automatic changes are made without legal justification.

Employee rights during a TUPE transfer

Employees affected by TUPE transfers are protected by law. Their rights include:

• Continuity of employment – their start date remains unchanged.
• Preserved pay and conditions.
• Protection from unfair dismissal due to the transfer.
• The right to be informed and consulted before the transfer.

If changes to terms are made after the transfer, they are only lawful if the reason is economic, technical or organisational (ETO) and involves a change in the workforce.

Common challenges in TUPE transfers

Managing TUPE transfers can be legally complex and emotionally sensitive. Common challenges include:

• Failure to properly inform or consult employees.
• Disputes over which employees are covered.
• Changes to terms without valid ETO reasons.
• Unexpected liabilities for the incoming employer.

To avoid these, it’s crucial to engage legal counsel early and maintain open communication with employees throughout the process.

Case scenario: TUPE in a marketing agency sale

In 2022, a digital marketing agency in Manchester was acquired by a larger media group. The 12 staff members working in the SEO and PPC departments were transferred under TUPE to the new employer. However, post-transfer, the acquiring firm attempted to revise commission structures without proper consultation.

The affected employees raised grievances, and the case led to a tribunal where the employer was found to have breached TUPE regulations. As a result, several employees received compensation for the unlawful variation of their contracts. This case highlights the risks of making unilateral changes post-transfer without a valid ETO reason.

Expert insights: Legal best practices for TUPE transfers

Legal professionals recommend the following best practices:

• Start employee consultation early – ideally as soon as a transfer is contemplated.
• Ensure full disclosure of employee liabilities before completion.
• Document all steps taken during the transfer process.
• Seek legal advice when considering contract changes post-transfer.

Failure to follow these steps can result in tribunal claims, reputational harm, and financial penalties.

Benefits and challenges of TUPE transfers

Benefits:

• Provides continuity and reassurance to employees.
• Protects long-standing employment rights.
• Reduces turnover during organisational changes.

Challenges:

• Legal complexity and administrative burden.
• Resistance to change from affected employees.
• Potential liabilities for incoming employers.

Understanding these challenges is the first step in mitigating risk. Business owners should always consult with experienced solicitors familiar with TUPE to manage transfers effectively.

Our Employment team can help you and your organisation manage your legal obligations as an employer with expert advice and representation when you need it. Our Employment Law specialists are available to support you and your business through a range of employment matters, relating to the hire and performance of your employees, as well as grievance management. We can help you develop employee policies, handbooks, and documentation that can help ensure that you comply with accepted codes of practice and are protected from potential liability. In the event of any disciplinary and grievance procedures, or litigation, we can provide high quality legal advice and representation.

Contact us for more information.

FAQs

What does TUPE transfer mean?

A TUPE transfer occurs when employees’ contracts are automatically transferred to a new employer due to a business sale or service change, preserving their existing terms and conditions.

What are the two types of TUPE transfers?

There are two main types:

1. Business transfers – Sale of all or part of a business.
2. Service provision changes – Outsourcing or reassignment of services.

Can an employee refuse to transfer under TUPE?

Yes, employees can object to the transfer. However, doing so typically results in the termination of their employment without redundancy pay or notice.

What information must be shared during a TUPE transfer?

The outgoing employer must provide employee liability information, including:

• Names and ages of employees.
• Employment terms and conditions.
• Any outstanding grievances or claims.

Can you change an employee’s contract after a TUPE transfer?

Contract changes are only valid if they are for an ETO (economic, technical, or organisational) reason and agreed through consultation. Unilateral changes can lead to tribunal claims.

What are the risks of ignoring TUPE obligations?

Risks include:

• Unfair dismissal claims.
• Financial penalties.
• Damaged reputation.

How long do TUPE protections last?

There is no set expiry. Protections remain in place unless a valid legal reason justifies changes, usually through collective agreement or ETO reasons.

This article was produced on the 20th October 2025 for information purposes only and should not be construed or relied upon as specific legal advice.