TUPE: what is it and when does it apply?
16 September 2025
TUPE is a widely used acronym for the Transfer of Undertakings (Protection of Employment) Regulations 2006. The main purpose of these regulations is to prevent employees from losing their jobs when a business is sold, a service is outsourced, or there is a change in contractor. TUPE will generally apply to a relevant transfer regardless of the intention or agreement of the parties; employers can therefore sometimes be surprised to find themselves in a TUPE situation.
TUPE first came into UK law through a European directive, and has a reputation for being tricky and often onerous. It was widely anticipated that the previous government would significantly change this area of the law following Brexit. But other than a small modification to consultation obligations, the regulations are unchanged and remain an expensive trap for the unwary. The current government announced in October 2024 that it would launch a call for evidence on TUPE, but this has not yet been issued, and the government’s intentions in relation to TUPE, if any, remain unclear.
Failing to recognise a TUPE transfer can cause a business to unwittingly take on employee liabilities or incur liability to pay damages for a failure to inform and consult. This can run to significant sums. In this article, we explain when the TUPE regulations will apply and draw out some key provisions to bear in mind.
Why do we need to know about TUPE?
If TUPE applies, employees gain a range of important rights and protections. These affect both the outgoing employer (called the transferor) and the incoming employer (called the transferee). The key provisions include, in summary:
The transferee inherits employees from the transferor, including most liabilities relating to those employees, such as ongoing discrimination liabilities.
The transferring employees transfer on their existing terms and conditions (with a few exceptions), and the new employer is significantly restricted from making changes to their contracts, even if this means that incoming employees are on more generous terms than existing staff.
In the lead-up to the transfer, both employers have to share specific information with each other at particular times.
There are obligations to inform and consult with staff, usually through representatives.
Other than in limited circumstances, if an employee is dismissed (whether before, on, or after the transfer) and the sole or principal reason is the transfer, this is automatically unfair. Liability will usually pass to the transferee.
If an employer is found to have failed in its duty to inform and consult, it will be ordered to pay up to 13 weeks’ gross pay to each affected employee. Failure to continue the employment of employees who are transferring under TUPE is likely to create liability to unfair dismissal claims. Specific provisions apply where the business is insolvent.
When does TUPE apply to a transfer?
This is a complex area of law, and many factors will be in play to determine whether TUPE applies. We always recommend seeking specialist advice. In broad terms, TUPE applies where there is a change in the legal identity of the employer in respect of whole or part of an ongoing business (or ‘undertaking’). It does not apply on a sale of shares.
Employment tribunals take a number of factors into account in deciding whether or not there has been a ‘transfer of an economic entity which retains its identity’. The different weight attached to each factor will depend on the nature of the business. Relevant factors include:
whether physical or tangible assets (such as buildings and equipment) are transferred, and the importance of these to the business;
whether intangible assets, such as a supplier database, customer database or intellectual property, are transferred;
whether any staff transfer, and whether similar staff are needed;
whether, and to what extent, business activities before the transfer are similar to those carried out afterwards; and
whether the activities of the business were suspended for any time.
Examples of relevant transfers of undertakings
Whether or not TUPE applies will depend on the facts of each case. By way of example, TUPE has been held to apply in the following circumstances:
in the sale of freehold or leasehold property, where the building was a serviced office block and would continue to operate as such after the sale;
on the assignment of a commercial property lease, where a tenant ran a restaurant at leased premises, a new tenant took on the property at the end of the lease, and the new tenant also ran a restaurant from the premises. A temporary closure to allow the new owner to apply for a licence or to allow for a refit would not necessarily prevent TUPE from applying;
in an example from European case law, where an airline company took over the charter flight contracts of a wound-up airline company and also developed a charter flight business on the routes the wound-up company served. It took on some of the leasing contracts for four planes, took on office equipment, and employed staff who had been on secondment with the wound-up company; and
when different parts of a business are divided up and taken on by new organisations.
When does TUPE apply to a change in service provider?
TUPE can apply in the following three scenarios in relation to a contract for the supply of services:
outsourcing of a service from a client to a contractor;
transfer of service provision from one contractor to another contractor; and
insourcing of a service, i.e. bringing a contract back in-house.
One-off or short-term contracts are unlikely to result in a TUPE transfer, for example, a contract for security staff provision for a one-off event. Where a contract is for the sale of goods, rather than for services, a change of contractor will not generally result in a TUPE transfer.
Other conditions have to be met for the TUPE regulations to apply, including:
there must be ‘an organised grouping of employees’ who are carrying out the work for the client. This can be just one employee; and
the activities carried out before and after the transfer must be fundamentally the same, although they need not be identical.
If the work being carried out is split up and divided between different providers, TUPE may still apply. The fragmentation of the activities between several contractors may mean that the activities can no longer be said to be the same. However, it has been found that it is possible for an employee’s contract of employment to be split between more than one provider. This can cause obvious practical difficulties, and the previous government consulted in early 2024 on legislating to prevent this result, but the subsequent change in government meant that this consultation was never completed.
Examples of relevant changes in service provider
As with transfers of undertakings, tribunals analyse changes in service provision in detail and make decisions based on the facts. The below examples from the case law should therefore be taken as indicative only.
TUPE did not apply where:
a new contractor changed a catering service from hot food in a canteen to pre-prepared cold food from a kiosk;
IT services provided to schools became fragmented at the end of a contract, with a new contractor initially taking on fewer than half the schools and five other contractors picking up IT work for the remaining schools;
vulnerable adults were moved from a residential care home operated by an NHS trust to their own homes under supported living arrangements. The new care arrangements were run by private-sector providers and were sufficiently different to the NHS service to prevent TUPE applying to the care workers.
TUPE did apply where:
a property manager was allocated to managing a portfolio of properties in the Netherlands for a client and as such was a ‘one person department’, and the management of the property portfolio moved to a subsidiary;
a manufacturer changed the haulage company it used to deliver its products, and the outgoing contractor had its own fleet of vehicles and directly employed the drivers, but the incoming contractor did not own the vehicles or directly employ any drivers. Instead, the new contractor acted as a middle man by putting each delivery out to tender to haulage companies who then did the deliveries; and
there was a change in contractor on a contract to provide accommodation and administrative services for service users, and the new contract terms involved a change in location and a change in the length of stay from up to four weeks to only one or two nights.
How we can help
The above examples demonstrate how complex TUPE can be. We can help you to identify a possible transfer as early as possible. This should give you time to comply with your legal obligations, take the TUPE regime into account with regards to timescales and workforce planning, and open up a window to negotiate protection for your business. Where necessary, we can work with partner firms on due diligence and contractual negotiations.
For further information, please contact the team at Synchrony Law.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.