Understanding the TUPE Regulations – A Step by Step Guide

Written by Andrew Johnson, Founder and CEO HRGuide - Thu 10th Oct 2024

Introduction

TUPE stands for Transfer of Undertakings (Protection of Employment). The TUPE regulations protect employees' rights when they transfer to a new employer. A TUPE transfer is when there's either:

  • a business transfer - A business transfer is when an organisation, or part of it, is transferred from one employer to another.
  • a service provider change - A service provider change is when a service is transferred to a new provider. For example, when another company takes over a contract for office catering.

The part of the organisation that's transferring must be in the UK for TUPE to apply. TUPE regulations can apply to the public and private sectors, as well as charities. The size of the organisation does not matter. For example, it could be a large organisation with many employees, or a small business with one employee.

What is a Business Transfer?

A business transfer is where a business or part of a business moves from one employer to another. TUPE applies to a business transfer when all of the following apply:

  • the employer changes
  • its main assets transfer to a new employer
  • business activities are the same as or similar to before the transfer

Assets can include employees, equipment, business premises, any work in progress, goodwill, for example the business reputation or customer base and intellectual property.

Business transfers can include:

  • mergers – where 2 businesses come together to form a new one
  • businesses that have just one employee

TUPE is not likely to apply if it's a transfer of shares or equipment only.

Who TUPE Regulations apply to?

When there's a transfer, employers must follow TUPE regulations. This includes:

  • the old employer – the employer making the transfer
  • the new employer – the employer taking on the transfer

TUPE regulations protect anyone who is legally classed as an employee. The TUPE Regulations might also protect someone who is legally classed as a worker. If you're not very sure whether someone is protected, you should some legal advice as this is a complex area. Finally, TUPE regulations do not protect agency workers.

Which employees transfer

All employees assigned to the business, or part of the business, that's transferring will automatically transfer with it. An employer cannot choose which employees they want to transfer.

What is a Service provider change?

A service provider change is where contracts are taken over. This can be because of:

  • 'outsourcing' – a service provided in-house is taken over by a contractor
  • 'insourcing' – a contract ends and the work is transferred in-house
  • 'retendering' – a contract ends and is taken over by a new contractor

TUPE applies to a service provider change when there's an 'organised grouping of employees'. For TUPE to apply to a service provider change, employees must be part of an 'organised grouping of employees'. This is the group of employees carrying out work for the 'client'. The client is the organisation receiving the services. There's no minimum grouping size. A grouping can have one employee. The client must stay the same after the transfer. The work should stay mainly the same.

The most common type of service provider changes often include contracts for:

  • catering
  • security
  • office cleaning
  • waste collection
  • machinery maintenance

TUPE does not apply if the contract is for:

  • the supply of goods only, for example a car manufacturer getting their brake pads from a different supplier
  • a single event or short-term task, for example a conference or an exhibition

Example of a service provider change

An organisation called ABC Ltd contracted out the catering at their offices to Food Court Ltd. When the contract ends, they retender the contract to Office Catering Ltd.

ABC Ltd is the client as they are receiving the services. The Chefs and Kitchen Staff are part of an organised grouping of employees. This is because they provide services to meet ABC Ltd needs. They'll transfer from Food Court Ltd to Office Catering Ltd under TUPE.

TUPE applies because the work and the client, ABC Ltd, stay the same.

Transferring to more than one employer

Sometimes a single business or service provider is replaced with multiple businesses or service providers. In this situation, employees transfer to more than one employer. TUPE might still apply. If the work is randomly broken up between businesses or service providers, TUPE is less likely to apply. This is because the work is not staying mainly the same. This is called 'fragmentation'. This is a complex area of law and you should consider legal advice.

If there's disagreement about whether TUPE applies

The old and new employer might not agree about whether TUPE applies to the situation. This can be confusing for an employee. An employee in this situation could:

  • raise a formal grievance – this is where they make a formal complaint to their current employer and their potential new employer
  • speak to their trade union representative, if they're a member

If they cannot resolve the situation, they might be able to make a claim to an employment tribunal. If you are facing this situation you should consider legal advice.

Get expert advice on the TUPE Regulations from HRGuide

Managing a TUPE Transfer is complex and covers many aspects of your employee rights. 

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