TUPE: what happens when staff transfer with the work

TUPE is one of those pieces of employment law that small businesses assume belongs to big corporate deals, right up until the morning three cleaners they have never met turn up as their employees with nine years' service each. The Transfer of Undertakings (Protection of Employment) Regulations 2006 apply to businesses of every size, and they bite far more often than owners expect.

The principle is simple: when work moves from one employer to another, the people doing that work move with it, on the terms they already had. Nobody has to agree to it and nobody signs anything. It happens by operation of law.

The two situations that trigger it

The first is a **business transfer** — you buy a business, or a distinct part of one, as a going concern. The assets, the customers and the trading activity move to you, so the employees assigned to that activity move too. Note the important exception: buying the shares in a limited company is not a TUPE transfer, because the employer hasn't changed. The company still employs everyone; you just own the company.

The second is a **service provision change**, and this is the one that catches small firms out. It covers outsourcing a service, bringing one back in-house, and winning a contract from an incumbent supplier. If there was an organised grouping of employees whose principal purpose was carrying out that work for that client, they transfer to whoever takes it on next. Cleaning, catering, security, maintenance, logistics, IT support — win the contract and you may well have won the team.

What transfers with them

Everything in the contract, and a good deal that isn't. Continuous service carries over, so someone with eight years at the old employer arrives with eight years at yours — which matters for redundancy pay, notice and unfair dismissal rights. Pay, hours, holiday entitlement above the statutory minimum, contractual bonuses and notice periods all come across intact.

So do the liabilities. Unpaid wages, accrued holiday, an unresolved grievance, an outstanding tribunal claim — those become yours on the day of transfer. Occupational pension rights are the main carve-out, though if a transferring employee was in an occupational scheme you must offer a replacement and match their contributions up to 6% of basic pay.

The file you're entitled to, 28 days out

The outgoing employer must give you **employee liability information** at least 28 days before the transfer. It has to cover the identity and age of each transferring employee, their written statement of employment particulars, any disciplinary action or grievances in the last two years, any tribunal or court claims brought in the last two years or reasonably expected, and any collective agreements that will still apply after the transfer.

If it doesn't arrive, you can bring a tribunal claim, and compensation is normally at least £500 per employee affected. In practice the money is beside the point. The information is how you price the work, and 28 days is the legal floor rather than a sensible timetable — ask for it as soon as the deal or the tender looks real.

Putting numbers on why it matters

Here's an illustrative example. You run a five-person cleaning company and win a contract from an incumbent who had three staff assigned to it, each doing 30 hours a week. You quoted the job assuming £12.60 an hour and the statutory 5.6 weeks' holiday. The employee liability information shows the transferring staff are on £13.50 an hour with six weeks' contractual holiday.

That 90p an hour difference is £1,404 a year each across 1,560 hours — £4,212 across the three. The extra 0.4 weeks of holiday adds roughly £162 each, another £486. Before employer National Insurance and pension, your quote is about £4,700 a year light, every year of the contract, on work you have already agreed a price for.

TUPE isn't a formality you complete after the deal. It's a number that belongs in the price you agree before it.

Informing, consulting, and the small-employer shortcut

Both employers must inform representatives of the affected employees that a transfer is happening, when, why, and what it means for them — and consult on any measures either side plans to take. For transfers completing on or after 1 July 2024, an employer with fewer than 50 employees, or one transferring fewer than 10 employees, can consult those employees directly where there are no existing representatives. That removes the need to run an election, which was always the disproportionate part for a small firm.

Getting this wrong is expensive: a tribunal can award up to 13 weeks' gross pay per affected employee, and that award is uncapped.

You can't simply change the terms — or dismiss

Harmonising transferred staff onto your own contracts is the most common mistake. A change is void if the sole or principal reason for it is the transfer, and that stays true even if the employee agrees to it. The exception is an economic, technical or organisational reason entailing changes in the workforce, which is narrower than it sounds.

The same logic applies to dismissal. If the sole or principal reason is the transfer, the dismissal is automatically unfair. A genuine redundancy for an ETO reason is possible, but it needs a real process — see the redundancy conversation nobody prepares you for. The ordinary qualifying period applies to these claims: two years today, dropping to six months from 1 January 2027.

The checklist before you sign anything

Ask for the employee liability information at tender or heads-of-terms stage, not at day 28. Price the job off the actual terms rather than your own pay rates. Budget for accrued holiday, notice and any live grievance you're inheriting — how much holiday staff are entitled to is a good sanity check. Get an indemnity in the sale or service contract covering pre-transfer liabilities. And put the day-one basics in place for your new arrivals, because the written statement of particulars is your obligation from the moment they land.

Common questions

Does TUPE apply if I buy the shares in a limited company?

No. A share purchase changes who owns the company, not who employs the staff — the company remains the employer throughout, so there is no transfer and TUPE is not triggered. That sounds like a simplification, and in one sense it is: you inherit every employment liability anyway, because you now own the entity that carries them. The practical difference is process rather than exposure. There is no requirement to inform and consult, no employee liability information deadline, and no 28-day clock. Instead you rely on due diligence and warranties in the share purchase agreement, which is why employment due diligence matters so much on a share deal.

Can I make transferring staff redundant after the transfer?

You can, but only for a genuine economic, technical or organisational reason entailing changes in the workforce — not simply because the transfer has left you with more people than you want. If the sole or principal reason for the dismissal is the transfer itself, it is automatically unfair. A real restructure, decided on business grounds and applied with a proper process, is a different matter: consult, use fair selection criteria, look for alternative roles, and document your reasoning at the time rather than afterwards. Remember that transferring employees bring their continuous service with them, so redundancy pay and notice are calculated on their full length of service.

What if the outgoing employer won't hand over the employee liability information?

You can bring a tribunal claim against them, and compensation is normally a minimum of £500 for each employee affected, unless the tribunal thinks a lower figure is just and equitable. The claim must generally be brought within three months of the transfer. That said, the compensation rarely matches the commercial damage of pricing a contract blind, so treat the legal remedy as a backstop rather than a plan. The stronger move is contractual: make provision of the information a condition in the tender response or sale agreement, with an indemnity for anything that turns out to be missing or wrong.

Do I have to match their pension arrangements?

Occupational pension rights relating to old age, invalidity and survivors' benefits do not transfer under TUPE in the same way as other terms, but there is a floor. Where a transferring employee was a member of an occupational pension scheme with the previous employer, the new employer must provide a scheme and match the employee's contributions up to 6% of basic pay. Basic pay is the measure — bonus, commission and overtime are excluded from the calculation. Auto-enrolment duties apply on top of that in the normal way. Get the pension position confirmed in writing during due diligence, because it is a recurring cost you cannot unwind later.