TUPE Transfers: Protected Terms and ETO Reasons

When a business, or a service contract such as an outsourced function, transfers to a new employer, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) automatically move affected employees across on their existing terms, with continuity of employment preserved.

What Is TUPE and When Does It Apply

TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006, protects employees when the business or organisation they work for changes hands. It covers two distinct situations. A business transfer is the sale, merger, or other transfer of a business, or a distinct part of one, as a going concern, so that it continues to operate under new ownership. A service provision change covers outsourcing (a service moves from an in-house team to a contractor), insourcing (a service moves back in-house), and re-tendering (a contract moves from one contractor to another). In both situations, the identity of the employer changes but the underlying work, and the employees doing it, generally carry on much as before. TUPE exists so that a change of employer, on its own, does not strip employees of the job security and terms they had built up.

What Transfers Automatically to the New Employer

Where TUPE applies, affected employees do not need to resign, reapply, or agree new contracts. Their employment transfers automatically to the incoming employer by operation of law, on the same terms they had immediately before the transfer.

Continuity of employment matters well beyond the transfer date itself. It is what an employee later relies on to show they have enough service to qualify for statutory redundancy pay or to bring an unfair dismissal claim, so a TUPE transfer does not reset that clock.

Changing Terms After a TUPE Transfer

A new employer cannot use the transfer as an opportunity to worsen an employee's terms. Any variation to a transferred employee's contract is generally void where the sole or principal reason for it is the transfer itself, even if the employee appears to consent at the time. This protection is not absolute. A change made for an ETO reason, or one that would have happened regardless of the transfer, can stand. Because the void rule is easy to get wrong in practice, an employer wanting to harmonise terms after a transfer should take advice before making changes, rather than assuming employee agreement is enough to make a transfer-related change lawful.

Dismissals Because of a TUPE Transfer

A dismissal is automatically unfair if the transfer itself is the sole or principal reason for it, whether the dismissal happens before or after the transfer takes place. This protects employees from being dismissed simply to avoid them transferring, or shortly after transferring, because the new employer would rather not take them on.

There is one recognised exception. A dismissal connected to the transfer can still be fair if the employer can show it is for an ETO reason, an economic, technical or organisational reason entailing changes in the workforce.

Even where an ETO reason exists, the employer must still follow a fair process, and a dismissal for an ETO reason is generally treated in the same way as a redundancy dismissal, with the usual requirements around selection and consultation.

Information and Consultation Duties

Both the outgoing and incoming employer have a duty to inform appropriate representatives of any employees affected by the transfer, whether or not those employees actually move employer. Appropriate representatives are either existing trade union representatives, where a union is recognised, or elected employee representatives. The employers must give information covering the fact of the transfer, when and why it is happening, its legal, economic, and social implications for affected employees, and any measures the employers envisage taking in connection with the transfer. Where either employer envisages measures affecting employees, it must also consult those representatives, with a view to seeking their agreement, and consider and respond to anything they raise. Skipping or rushing this process is a common source of tribunal claims following a transfer.

Employee Liability Information

Before the transfer, the outgoing employer must give the incoming employer Employee Liability Information about each employee who is due to transfer. This lets the new employer understand what it is taking on. It generally covers matters such as the employee's identity and age, the particulars of employment the employee is entitled to, details of any relevant disciplinary or grievance history, and information about any existing legal proceedings brought by, or that could be brought by, the employee. Getting this information late, or getting it wrong, does not stop the transfer or the automatic transfer of employees, but it can lead to a separate claim by the incoming employer against the outgoing one.

Northern Ireland

TUPE applies across the whole of the United Kingdom, including Northern Ireland, under near-identical legislation. Disputes about a TUPE transfer in Northern Ireland go to the Industrial Tribunal rather than the Employment Tribunal used in Great Britain, and the relevant enforcement and conciliation body is the Labour Relations Agency (LRA) rather than ACAS.

If a TUPE transfer ends in dismissal or a disputed exit, related guides cover unfair dismissal, redundancy pay, and settlement agreements. For the full picture of UK employment rights, see the UK Employment Law hub and the United Kingdom hub.

This article provides general information about TUPE transfers in Great Britain and is not legal advice. Whether TUPE applies to a particular transfer, and whether a dismissal or contract change is lawful, depends on the individual facts, so anyone facing a transfer should check their position with ACAS, Citizens Advice, or a solicitor.