TUPE regulations explained for employers changing supplier or acquiring a team

Changing a service supplier or buying a business can move people as well as contracts. In the UK, the TUPE regulations decide when that happens and on what terms. Many employers only discover TUPE once a transfer is already under way. This guide explains when the rules apply, what employees keep and how to prepare.

What are the TUPE regulations?

The TUPE regulations are the Transfer of Undertakings (Protection of Employment) Regulations 2006. They protect employees when a business, or part of it, moves to a new employer. In those cases, jobs usually transfer automatically. Employees keep their existing terms and conditions, and their continuous service carries over.

According to GOV.UK guidance on business transfers and takeovers, TUPE covers two situations:

• Business transfers: a business or part of one moves to a new employer, such as in an asset sale.
• Service provision changes: a service moves to a contractor, between contractors or back in-house.

By contrast, a share sale usually falls outside TUPE. The employer stays the same company, so only the owner changes.

When does a service provision change trigger TUPE?

A service provision change applies when a client outsources, retenders or insources an activity. There must also be an organised group of employees whose main purpose is serving that client. When both conditions are met, those employees move with the work.

However, there are clear exceptions. TUPE does not apply to a contract for a single event or a short-term task. Likewise, it does not apply where the contract is wholly or mainly for the supply of goods. Therefore, check each contract carefully before you assume either outcome.

What are TUPE transfer employee rights?

TUPE transfer employee rights centre on continuity. Transferring staff keep their pay, benefits, contractual terms and length of service. Moreover, the new employer cannot change terms if the transfer itself is the reason. Dismissals caused by the transfer are also unfair, unless the employer has an economic, technical or organisational (ETO) reason. Beyond this, a few other rules matter:

• Pensions: pension rights earned before the transfer are protected. However, the new employer need not offer an identical scheme.
• Objecting: employees can refuse to transfer. In most cases, this counts as resigning.
• Worse conditions: if the transfer makes working conditions significantly worse, employees can resign and claim unfair dismissal.

What must employers do before a TUPE transfer?

Both employers carry duties before the transfer date. TUPE regulations state that outgoing employer must share employee liability information with the incoming employer. At the same time, both employers must inform, and sometimes consult, employee representatives. Failing to inform or consult can lead to an award of up to 13 weeks’ pay per affected employee.

Obligation	Who is responsible	Timing
Employee liability information	Outgoing employer	At least 28 days before the transfer
Inform representatives	Both employers	Long enough before the transfer to allow consultation
Consult on planned changes	Any employer planning measures	Before the transfer, with a view to agreement
Direct consultation with staff	Employers with fewer than 50 staff, or transferring fewer than 10	Transfers on or after 1 July 2024, with no existing representatives

Employee liability information includes each employee’s age, main employment terms and recent disciplinary or grievance history. GOV.UK sets out the full list. Similarly, its consultation guidance explains what representatives must hear and when.

How to run TUPE due diligence when acquiring a team

TUPE due diligence identifies which employees will transfer and which liabilities come with them. Because liabilities pass to the incoming employer, gaps become your problem after completion. Start early, ideally before you agree price or contract terms. Then build protection into the agreement through warranties and indemnities.

A practical TUPE due diligence checklist covers:

• Headcount, roles and who is genuinely assigned to the transferring work
• Contracts, pay, bonuses and any collective agreements
• Pension arrangements and any enhanced redundancy terms
• Open grievances, disciplinary cases and tribunal claims
• Holiday pay accruals and payroll accuracy
• Right-to-work records for every transferring employee

Next, plan payroll integration. Transferred staff must be paid correctly from the first pay date. For a view of the systems involved, see our guide to cloud, enterprise and EOR payroll systems.

Does TUPE apply when you change payroll or EOR provider?

It depends on who does the work. Switching payroll software or a bureau rarely transfers anyone, because no organised team serves only you. However, if a supplier has a dedicated team for your account, a service provision change may apply. Where an employer of record employs your workers, take legal advice before switching.

In practice, this is where many transitions go wrong. A new provider may inherit staff, liabilities and consultation duties without planning for them. So, raise TUPE in the very first supplier conversation. If you are weighing a new model, make sure that you’re aware of all the TUPE regulations and also read when an employer of record is worth it.

Moving teams across organisations with Octagon

A TUPE transfer is more than paperwork. It moves people, obligations and trust from one organisation to another with strict TUPE regulations. Since 1987, Octagon Professionals has provided the structure that lets organisations move talent across borders and systems with legitimacy. Institutions such as Europol and OPCW rely on that experience.

Our HR experts reduce the risks that derail transfers: payroll errors, missed consultation steps, hidden liabilities and right-to-work gaps. Meanwhile, you keep full control over pay, benefits and working arrangements. Contact Octagon Professionals to plan your next transition with confidence.

Frequently asked questions

Do employees have to transfer under TUPE?

No. Employees can object to transferring to the new employer. However, objecting usually ends their employment without a dismissal, so no notice or redundancy pay is due. The exception is where the transfer would make their working conditions substantially worse. In that case, they may resign and claim unfair dismissal.

Can a new employer change terms and conditions after TUPE?

Only in limited cases. A new employer cannot change contracts simply because of the transfer, even with agreement. Changes may be valid with an economic, technical or organisational reason involving workforce changes. The employee must also agree. Changes unrelated to the transfer follow normal contract rules.

How long before a TUPE transfer must information be shared?

The outgoing employer must send employee liability information at least 28 days before the transfer date. This covers identity, age, employment terms and recent disputes. Separately, representatives must be informed early enough for meaningful consultation to take place. Late or missing information can expose employers to tribunal awards.

Does TUPE apply to a share sale?

Usually not. In a share sale, the company that employs the staff stays the same, and only its owners change. As a result, employment contracts continue without a transfer. However, buyers should still review employment risks, because all existing liabilities remain inside the company they acquire.