In plain terms
The regulations exist so that a change of ownership does not strip employees of their jobs or their terms. When TUPE applies, the affected staff move to the new employer (the transferee) on the same pay, hours, holiday, length of service, and contractual benefits they held with the old employer (the transferor). Most rights and liabilities connected with those contracts transfer too, so the incoming employer inherits them as if it had always been the employer.
The TUPE regulations also constrain what happens around the transfer. A variation to terms and conditions is void where the sole or principal reason for it is the transfer itself, and a dismissal for that reason is automatically unfair. The main gateway out of both restrictions is an economic, technical, or organisational (ETO) reason entailing changes in the workforce. Alongside these protections, the regulations impose process duties: both employers must inform, and where appropriate consult, recognised trade unions or elected employee representatives, and the transferor must give the transferee employee liability information at least 28 days before the transfer.
The regulations originally implemented the EU Acquired Rights Directive and continue in force in the UK after Brexit. The 2006 version replaced the earlier 1981 regulations, and amendments in 2014 refined the service provision change test and allowed the smallest businesses, those with fewer than 10 employees, to consult affected staff directly where there are no existing representatives.
Why it matters in a contract
Because the TUPE regulations turn employees into a live liability whenever a business or service moves, they sit at the centre of share and asset purchase agreements, outsourcing and managed service contracts, and facilities, IT, and catering arrangements. Parties rarely leave the statutory position untouched. They negotiate who bears the cost of transferring staff, indemnities for pre-transfer and post-transfer liabilities, warranties on the accuracy of employee data, and how the consultation duties are allocated between buyer and seller.
The stakes are financial and reputational. Failure to inform and consult can lead to a protective award of up to 13 weeks’ pay per affected employee, and late or inaccurate employee liability information can trigger claims between the parties. Precise drafting on indemnity scope, notice windows, and the ETO carve-outs is what keeps those liabilities where the parties intended.
This is where a contract lifecycle management platform helps. In Pactolane, the contract repository keeps every outsourcing and service agreement searchable in one place, PactAI spots and extracts the TUPE, indemnity, and employee liability clauses so they are not buried in a schedule, and renewal and deadline alerts flag the 28-day information window and consultation timelines before they lapse. Conflict detection and exposure analysis help a buyer see where TUPE liabilities overlap across a portfolio before signing. The platform prepares the picture; your legal and HR teams make the decisions.
Example
A local authority outsources its payroll service to a contractor for five years. When the contract is retendered and awarded to a different provider, the same activity continues for the same client, so this is a service provision change and the TUPE regulations apply. The payroll staff assigned to the work transfer to the incoming provider on their existing terms and continuity of service. The outgoing provider must supply employee liability information at least 28 days before the handover, both providers must inform and, if needed, consult the affected employees, and any dismissal or pay cut driven by the transfer alone will be void or automatically unfair unless a genuine ETO reason applies.
General legal information, not legal advice.
Frequently asked questions
What are the TUPE regulations?
The TUPE regulations are the Transfer of Undertakings (Protection of Employment) Regulations 2006, the UK law that protects employees when the business or service they work in transfers to a new employer. They move the affected staff automatically to the incoming employer on their existing terms and continuity of service. The regulations originally implemented the EU Acquired Rights Directive and continue to apply in the UK after Brexit.
What do the TUPE regulations require employers to do?
The regulations require the affected employees to transfer to the new employer on their existing contracts, and they treat any dismissal or change to terms driven by the transfer as void or automatically unfair unless an economic, technical, or organisational reason applies. Both employers must inform, and where appropriate consult, recognised trade unions or elected employee representatives before the transfer. The outgoing employer must also give the incoming employer employee liability information at least 28 days beforehand.
Do the TUPE regulations still apply after Brexit?
Yes. The TUPE regulations are UK domestic law and remain in force after Brexit, so they continue to govern business transfers and service provision changes in the UK. The regulations originally implemented the EU Acquired Rights Directive, and any future divergence from retained EU case law would come through UK legislation or the courts.
What are the penalties for breaching the TUPE regulations?
Failure to inform and consult employee representatives can lead an employment tribunal to make a protective award of up to 13 weeks' gross pay for each affected employee. Late or inaccurate employee liability information can give rise to a compensation claim between the outgoing and incoming employers. A dismissal whose sole or principal reason is the transfer is automatically unfair, exposing the employer to unfair dismissal liability.
Do the TUPE regulations apply to small businesses?
Yes, the TUPE regulations apply regardless of the size of the business, so even a very small employer can trigger a transfer. Since the 2014 amendments, businesses with fewer than 10 employees may inform and consult the affected staff directly where there are no existing representatives, rather than arranging elections. The core protections, automatic transfer and the restriction on transfer-related dismissals, apply in the same way.
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