What is TUPE and how does it work?

Finding out your employer is changing can be a cause for concern.

TUPE is the set of regulations to ensure employee rights don’t change, even when the employer does.

Here’s everything you need to know about TUPE.

What is TUPE?

Let’s face it: ‘Transfer of Undertakings Protection of Employment Regulations 2006’ is a bit of a mouthful, so it’s more commonly shortened as the acronym TUPE.  

TUPE legislation is designed to protect the rights of employees if the company they work for is going through any changes, such as a merger or acquisition.

The idea is that even if a company is changing hands, employee rights are protected under TUPE. 

If a company goes through any significant changes, the first concern employees may have is how this affects their pension pot.

TUPE ensures any benefits earned through a workplace pension scheme are protected.

How does TUPE work?

Generally, you’ll hear the word TUPE because your employer is changing.

For the TUPE rules to apply, three criteria need to be met: 

• A ‘relevant business transfer’ has taken place Meaning the company has stayed the same, but has a new owner or part-owner — sometimes this is known as a ‘TUPE transfer’
• The employer has changed
• The employee was an active member of a pension scheme or was eligible — or soon to be eligible — to join the pension if they chose to, up to the point of the transfer. 

TUPE can also apply if you’re a contractor in some circumstances, this is known as a ‘service provision change’. 

TUPE regulations apply to employees working in both the private and public sectors. 

So, when does TUPE not apply?

If all three of the criteria above are not satisfied, TUPE may not apply.

For example, if shares in the business have been sold TUPE also does not apply because the employer will remain the same. 

What is the TUPE process?

Generally, TUPE should be a fairly straightforward process when a company changes ownership.

It’s in everyone’s best interests that employees know their rights are protected, which is exactly what TUPE was designed to do. 

TUPE processes may differ between companies, but as a rule the TUPE process should follow these five steps: 

1: A TUPE transfer or part-transfer takes place 

2: The employers, both old and new, establish which employees will be affected 

3: Employees affected by the transfer will be notified of their status, and should be told anything they need to know about how the company may change — for example if their workplace location, working patterns or job description could be altered 

4: The previous employer will give the new employer information they need about the employees who are being transferred 

5: The transfer is completed and the employees carry their contracts and their length of service over with them 

How long does TUPE last?

After a TUPE transfer, employers can agree with employees to change an employment contract following their usual process.  

However, if the main reason for changing the contract is the transfer, TUPE is relevant for an indefinite period.  

Unless the changes an employer wants to make are improving an employee's terms and conditions (for example increasing annual leave) or come under ETO (economic, technical or organisational) reasons, TUPE will protect an employee’s existing rights.  

If an employer wanted to change an employee’s contract, they would need a reason completely unrelated to the transfer. 

What are the TUPE regulations?

TUPE falls under employment law, and primarily exists to protect employees when the business they work through undergoes changes.  

Legally speaking, TUPE is a set of legislation allowing employees to transfer their employment between Employer A and Employer B, without changes to their employee rights.  

Under TUPE, employees have the legal right to transfer to Employee B on their existing terms and conditions of employment.  

Does TUPE affect redundancy rights?

In short: no. During a TUPE transfer, existing employee rights to a fair redundancy will not be affected.

However, this depends on whether an employee is at risk of redundancy before or after TUPE applies. 

Can an employee be made redundant before a TUPE transfer?

No, an employer can’t make an employee redundant because the new employer has asked them to.

This could amount to unfair dismissal, and an employee who has been unfairly dismissed could be entitled to compensation. 

A redundancy consultation might begin if more than 20 employees are deemed at risk of redundancy, if both former and new employer agrees.

However, an employee cannot be made redundant before the transfer. 

Can employees be made redundant after a TUPE transfer?

There are selective circumstances in which a new employer can make redundancies following a transfer.  

If the redundancies are not related to the transfer, normal redundancy procedures apply.  

However, if an employer wants to make an employee redundant following a transfer, they will need to prove two things: 

• There is a genuine redundancy
• A need to make redundancy for ETO reasons 

What are ETO reasons for redundancy?

ETO reasons could include changing the location of the workplace or reducing staff numbers.  

If an employee is made redundant after a TUPE transfer, the new employer is responsible for redundancy pay. Redundancy consultation rules still apply.

Get expert financial advice

When a UK business changes owners, its employees are protected under the TUPE legislation. 

TUPE applies to employees whose jobs would transfer to the new company after a merger or acquisition, except if they are made redundant or, in some cases, if their employer becomes insolvent.

It will also apply if your employment terms and conditions transfer to the new company and if your continuity of employment is maintained once your employer changes hands.

Let Unbiased connect you with an expert financial adviser who can help you navigate the stipulations of TUPE and understand how your rights will be protected following changes to the ownership of your employer.