The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006 are designed to safeguard employees’ rights when a business changes hands or there’s a change in service provider. For HR professionals, understanding when TUPE applies and how to manage the process is essential in minimising risk and supporting employees. 

TUPE applies to two main scenarios:

Business transfers, such as a sale or merger, where a business or part of a business is transferred from one employer to another and the economic entity retains its identity.Service provision changes (SPCs): this applies when a service is outsourced, moved to a new provider or brought back in-house.Identifying an SPC

Not every SPC triggers a TUPE transfer, and there are additional requirements to be met before TUPE applies:

The activities must remain fundamentally the same – substantial change in the nature or scope could mean TUPE doesn’t apply (eg, where a contractor providing full catering services is replaced by one who only provides sandwiches).There must be an organised grouping of employees whose principal purpose is carrying out the relevant activities for the client; this could be a dedicated team or even one employee, but they must be deliberately organised for that client’s work, not just employees who happen to spend most of their time on a particular contract.The activities must not be a one-off event or task of short-term duration or consist mainly of the supply of goods.The client must be the same; eg, if the new owners of a commercial property engage new caretakers on taking ownership, the client has changed, so TUPE is unlikely to apply.Managing employee transfers under TUPE

When TUPE applies, employees assigned to the undertaking automatically transfer on existing terms and conditions, including continuity of employment. Employees cannot be dismissed if the reason is the transfer itself, and post-transfer contractual changes are generally void except in limited circumstances.

Key steps for HR include:

Due diligence: establishing whether TUPE applies is crucial, but can be difficult in practice when taking over a service as the existing provider may be reluctant to share information.Inform and consult: both outgoing and incoming providers must inform and, where appropriate, consult with their affected employees, either through employee representatives or, in some cases, directly.Proposed measures: the incoming provider must supply the outgoing provider with information about any significant measures it plans to take, such as a change of work location or planned redundancies.Employee liability information: the outgoing employer must provide the incoming employer with specified information about the transferring employees at least 28 days before the transfer. Practical considerationsOrganised grouping: it can be very difficult for an incoming provider to identify whether there is genuinely an organised grouping of employees servicing the contract and they may need to ask the outgoing supplier targeted questions.Staff changes: outgoing providers may try to move staff around pre-transfer to retain their best employees. This is difficult to prevent unless there are contractual provisions to prohibit it.TUPE entry and exit provisions: TUPE transfers occur as a matter of law but there may be contractual entry/exit provisions that determine where liabilities rest.Joint and several liability: the obligation to consult rests most heavily on outgoing providers that usually employ the affected employees, but liability for failing to consult is joint and several and compensation is up to 13 weeks’ pay per employee, so incoming providers also have an interest in ensuring compliance.Pensions: pensions do not transfer under TUPE, but care is required with former local government employees, who have additional protection.

TUPE is a complex area and, because of restrictions on changing contracts and dismissing employees post transfer, employers must understand the workforce they will inherit. Early engagement, robust due diligence and professional advice are therefore likely to be crucial.

Andrea Thomas is an employment partner at HCR Law