In plain terms
When TUPE applies, the affected employees do not lose their jobs or start again on fresh contracts. Their employment simply continues with the new employer (the transferee), who inherits their contracts, continuity of service, and most accrued rights and liabilities from the previous employer (the transferor). In practice this means salary, holiday entitlement, length of service, and contractual benefits carry across unchanged.
The regulations also restrict what the new employer can do afterwards. A change to terms and conditions is void if the sole or principal reason for it is the transfer itself, and a dismissal for that reason is automatically unfair. The main exception is where the employer can show an economic, technical, or organisational (ETO) reason entailing changes in the workforce. Both employers must also inform, and where appropriate consult, recognised trade unions or elected employee representatives before the transfer, and the transferor must supply employee liability information to the transferee at least 28 days beforehand.
Why it matters in a contract
TUPE turns people into a live contractual risk in any deal that moves a business or a service, so it sits at the heart of share and asset purchase agreements, outsourcing contracts, and facilities, IT, or managed service arrangements. The parties rarely leave the statutory position untouched: they negotiate who bears the cost of transferring employees, indemnities for pre-transfer liabilities and for redundancies, warranties about the accuracy of employee data, and pension arrangements, which are treated separately from other terms.
Getting this wrong is expensive. Failure to inform and consult can lead to a protective award of up to 13 weeks’ pay per affected employee, and inaccurate or late employee liability information can trigger claims between the parties. Clear drafting on indemnity scope, notice periods, and the allocation of consultation duties is what keeps those liabilities where the parties intended.
This is where a contract lifecycle management platform earns its place. In Pactolane, the contract repository keeps every outsourcing and service agreement in one searchable place, PactAI spots and extracts the TUPE, indemnity, and employee liability clauses so nothing is buried in an appendix, and renewal and deadline alerts flag the 28-day information window and consultation timelines before they lapse. Conflict detection across contracts and exposure analysis help a buyer see, before signing, where TUPE liabilities overlap or stack across a portfolio. The platform prepares the picture; your legal and HR teams make the decisions.
Example
A facilities company holds a three-year cleaning contract for an office landlord. When the contract ends, the landlord awards it to a new provider. Because the same activity continues for the same client, this is a service provision change, and TUPE applies: the cleaners assigned to that contract transfer to the incoming provider on their existing pay, hours, and continuity of service. The outgoing provider must give employee liability information at least 28 days before the handover, and both providers must inform and, if needed, consult the affected staff. If the new provider later cuts pay simply because of the transfer, that change is void, and any dismissal connected to the transfer, absent an ETO reason, is automatically unfair.
General legal information, not legal advice.
Frequently asked questions
What does TUPE stand for?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. It is the UK legislation that protects employees' terms of employment when the business or service they work in transfers to a new employer. The regulations implement the EU Acquired Rights Directive into UK law and continue to apply after Brexit.
When does TUPE apply?
TUPE applies in two situations. The first is a business transfer, where a business, or a distinct part of it, is sold or otherwise moves to a new owner as a going concern. The second is a service provision change, where a service is outsourced to a contractor, brought back in house, or reassigned from one contractor to another. In both cases the affected employees transfer automatically to the new employer on their existing terms.
Can a new employer change terms and conditions after a TUPE transfer?
Generally no, not if the reason for the change is the transfer itself, because such changes are void under the regulations. The main exception is an economic, technical, or organisational reason entailing changes in the workforce, sometimes with the employee's agreement. Employers should take advice before varying transferred contracts, as unlawful changes can lead to claims.
What is employee liability information under TUPE?
Employee liability information is a set of details the outgoing employer must give the incoming employer about the transferring staff. It includes identities, ages, particulars of employment, disciplinary and grievance records, and any claims. It must be provided at least 28 days before the transfer, and late or inaccurate information can give rise to a claim between the two employers.
Is a dismissal because of a TUPE transfer automatically unfair?
Yes, a dismissal is automatically unfair if the sole or principal reason for it is the transfer. The exception is where the employer can show an economic, technical, or organisational reason entailing changes in the workforce, which may make the dismissal potentially fair, subject to a fair process. Employees generally need the qualifying period of continuous service to bring an ordinary unfair dismissal claim.
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