I Wonder How to Handle TUPE Transfers Correctly?

TUPE transfers can often feel like a complex area of employment law. Whether you're buying or selling a business, taking on a new contract, outsourcing services or changing service providers, it's important to understand your legal responsibilities from the outset. Getting the process right can help minimise disruption, reduce legal risk and provide reassurance for everyone involved.

If you're new to TUPE, we recommend starting with our previous articles. Part One explains what TUPE is, why it exists and when it applies, while Part Two looks at how TUPE works in practice, including the transfer process and the rights of employees. Together, these articles provide a solid introduction to the TUPE Regulations.

In this article, we focus on the practical steps employers can take to successfully manage a TUPE transfer, along with the most common pitfalls to avoid.

What is a TUPE transfer?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Essentially, TUPE protects employees when a business, part of a business or certain services transfer from one employer to another. Employees assigned to the transferring business or service usually move to the new employer on their existing terms and conditions, with their continuity of employment preserved.

The outgoing employer is known as the transferor, while the incoming employer is the transferee. For employment purposes, the transferring workforce is treated as though the transferee has always been their employer.

When does TUPE apply?

There are two main situations where TUPE may apply.

Business transfers - A business transfer occurs when an economic entity transfers from one owner to another.

Service provision changes - TUPE can also apply where services move between providers. This includes:

• Outsourcing services from a client to a contractor.
• Retendering services from one contractor to another.
• Bringing services back in-house (insourcing).

In these situations, TUPE may apply where there is an organised grouping of employees whose principal purpose is carrying out the activities that are transferring. A key consideration is whether those activities will remain fundamentally the same following the change.

TUPE can apply to transfers in both the private and public sectors.

In most TUPE transfers, employees who are assigned to the transferring business or service automatically become employees of the new employer on the transfer date. Their contractual terms, continuity of employment and most employment rights continue.

Dismissals connected to the transfer are likely to be automatically unfair unless there is an economic, technical or organisational (ETO) reason that entails changes in the workforce.

In short, TUPE is designed to protect employees while providing a legal framework for employers to manage business and service transfers.

Employer responsibilities during a TUPE transfer

The TUPE Regulations place a number of legal responsibilities on employers. In practice, this means employers should:

Inform and, where appropriate, consult employees - Both the transferor and transferee must provide specified information to the appropriate employee representatives in good time before the transfer. The obligation to consult arises where an employer envisages taking "measures" in relation to transferring employees. The term "measures" is interpreted widely and includes any action or step proposed because of the transfer, including:

• Changing employees' pay dates.
• Changing the holiday year or holiday entitlement.
• Introducing or changing employee benefits.
• Making any other changes to existing terms, conditions or working arrangements.

Where there are no existing employee representatives, elections will usually be required.

Preserve employees' terms and continuity - Employees assigned to the transferring undertaking or organised grouping generally transfer with:

• Their existing contractual terms.
• Continuity of employment.
• Most policies and benefits.

Restrictions apply where the sole or principal reason for changing terms and conditions is the transfer itself.

Identify ETO reasons carefully - An economic, technical or organisational (ETO) reason relates to the business's economic needs, technology or organisation and must entail changes in the workforce, such as changes to employee numbers or functions. Without a genuine ETO reason, dismissals or detrimental contractual changes connected to the transfer are likely to be unlawful.

Provide employee liability information - The transferor must provide the transferee with specified employee liability information within the required timescales before the transfer. This information allows the incoming employer to carry out workforce planning, complete due diligence and prepare for post-transfer integration.

Deal with objections and non-transferring employees - Some employees may object to transferring. Where this happens, their employment will normally end on the transfer date without it being treated as a dismissal. Other employees may not be assigned to the transferring activities and therefore may not transfer. Careful analysis of employee assignment is essential.

Consider pensions and benefits - Occupational pension rights relating to old-age, invalidity or survivors' benefits do not transfer in full under TUPE. However, separate obligations relating to minimum pension provision apply in many situations. Other employee benefits and liabilities will usually transfer.

Practical steps for managing a TUPE transfer

While every TUPE transfer is different, employers can reduce risk by planning ahead and taking practical steps throughout the process.

Employer TUPE checklist:

• Build a clear project plan with timelines, decision owners, and transfer-date assumptions, while aligning procurement or transaction milestones with the TUPE process.
   
• Identify the organised grouping of employees and determine who is assigned by considering factors such as time spent, cost allocation, management structure, and purpose, and document the rationale throughout.
   
• Exchange employee liability information and any follow-up queries as early as possible so the incoming employer can assess staffing, costs and any proposed measures.
   
• Prepare clear staff communications and FAQs, appoint employee representatives where required and schedule consultation meetings in good time.
   
• Test post-transfer arrangements, including payroll, IT access, policies and line management so that employees can work without unnecessary disruption from day one.

Risks of getting a TUPE transfer wrong

Failing to prepare properly for a TUPE transfer can lead to legal, financial and operational issues.

Potential risks include:

• Claims for automatically unfair dismissal and protective awards where dismissals or consultation obligations have not been handled correctly.
   
• Unlawful contractual changes, which may be ineffective or lead to constructive dismissal claims, back pay and the reinstatement of original terms.
   
• Incomplete or late employee liability information, resulting in unexpected liabilities, duplicate roles or increased costs for the incoming employer.
   
• Poor transfer planning, which can disrupt service delivery, breach client contracts and damage customer relationships.
   
• Employee relations issues, including uncertainty, low morale and increased staff turnover where communication has been inadequate.

Summary

A successful TUPE transfer starts with careful planning, clear communication and a good understanding of your legal responsibilities.

By identifying who is transferring, sharing the right information, considering any proposed measures and preparing effectively for the transfer date, employers can reduce legal risk, minimise disruption and help employees feel supported throughout the process.

Speak to our Employment team

If you're buying or selling a business, taking on a new contract or managing a TUPE transfer, our Employment team can provide clear, practical advice at every stage of the process.

Our Peace of Mind team is also on hand to provide ongoing employment law support, while our Document Audit Team can assist with drafting and reviewing workplace policies.

To speak to our Employment team, call 023 8071 7717 or email employment@warnergoodman.co.uk.

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