TUPE Explained: Your Rights When Your Employer Changes Hands

When a business is sold, merged with another company, or outsources a service, employees often fear for their jobs. TUPE — the Transfer of Undertakings (Protection of Employment) Regulations 2006 — exists to protect you. It is one of the most important pieces of employment law in the UK, and one of the least understood.

What Does TUPE Do?

In short: TUPE transfers your employment from the old employer (the transferor) to the new employer (the transferee) automatically, on the same terms and conditions, as if you had always worked for the new employer.

This means:

• Your job is protected — the new employer takes on your contract
• Your pay, hours, holiday entitlement, and other contractual terms carry across unchanged
• Your continuity of service is preserved — you do not start again as a new employee
• Dismissal connected to the TUPE transfer is automatically unfair (with some limited exceptions)

TUPE is one of the few areas of UK employment law where protection is not limited to employees with two years' service — protection from automatically unfair TUPE-related dismissal applies from day one.

When Does TUPE Apply?

TUPE applies in two main scenarios:

1. Business Transfers

When a business or part of a business is sold or transferred to a new owner as a "going concern." This includes:

• Sale of a company's trade and assets (not just shares)
• Transfer of a specific business unit or division
• Franchises changing hands

A share sale — where the company itself is sold and the employer entity remains the same — does not trigger TUPE, because there is no change in employer.

2. Service Provision Changes

Where a service is:

• Outsourced — the client stops doing it in-house and contracts it to a third party
• Re-tendered — the contract moves from one contractor to another
• Brought back in-house — the client takes the service back from a contractor

For TUPE to apply to a service provision change, the service must be a discrete activity that will essentially continue, and there must be an organised grouping of employees whose principal purpose is carrying out that activity.

What Transfers With You?

All contractual terms and conditions transfer, including:

• Salary and pay structure
• Working hours and location
• Holiday entitlement (including any accrued but untaken holiday)
• Sick pay provisions
• Notice periods
• Bonus and commission arrangements
• Enhanced redundancy terms (if contractual)
• Non-compete and confidentiality obligations

What does not transfer:

• Occupational pension benefits above the minimum statutory level (though the new employer must provide broadly comparable pension arrangements)
• Criminal liability of the previous employer
• Rights under share option schemes (though equity treatment may be covered separately in the sale agreement)

What Can the New Employer Change?

This is where employees most often encounter problems. The new employer may want to harmonise terms — bringing all employees onto the same contracts. TUPE significantly restricts this.

Under TUPE, changes to your terms and conditions are void if the sole or principal reason is the transfer itself. You can agree to change your contract post-transfer, but if the reason for the change is the TUPE transfer, that agreement is unenforceable.

There is one exception: changes can be made where the employer can show an economic, technical, or organisational (ETO) reason entailing changes in the workforce — essentially, a genuine operational restructuring beyond simply wanting everyone on the same contract.

In practice:

• A new employer cannot simply reduce your pay to match existing staff
• A new employer cannot remove contractual benefits because "that's not how we do things here"
• A new employer cannot change your working hours without your agreement — and even with your agreement, if the change is TUPE-connected, it may be void

Protection From Dismissal

Dismissal connected to the TUPE transfer is automatically unfair, regardless of your length of service. This applies where the transfer is the sole or principal reason for dismissal.

The exception is where the dismissal is for an ETO reason entailing changes in the workforce — for example, a genuine redundancy driven by the new employer's operational needs, following a proper consultation process.

If you are dismissed in connection with a TUPE transfer:

• You do not need two years' service to claim automatically unfair dismissal
• Compensation for automatically unfair dismissal can include a basic award and a compensatory award (up to £115,115 as of April 2025)
• The new employer carries liability for any claims arising from the transfer, even for dismissals made by the old employer shortly before it

Your Right to Information and Consultation

Both the old and new employers have obligations to inform and consult affected employees (or their representatives) before the transfer takes place. Employers must provide:

• The fact that a transfer is taking place and its proposed timing
• The reasons for the transfer
• The legal, economic, and social implications for affected employees
• Any measures the new employer intends to take — including any planned redundancies or changes

This information must be provided long enough before the transfer for consultation to be meaningful. There is no fixed statutory minimum, but courts have taken a dim view of last-minute notifications.

If the employer fails to properly inform and consult, compensation of up to 13 weeks' gross pay per affected employee can be awarded at tribunal.

What to Do If You Suspect Your Rights Are Being Ignored

If your new employer:

• Cuts your pay or benefits after a TUPE transfer
• Changes your role, location, or hours significantly
• Dismisses you and claims it is unrelated to the transfer
• Fails to inform you of the transfer in advance

You should:

1. Document everything — keep records of what you were told, when, and by whom
2. Check your original contract — know what terms you had before the transfer
3. Write to your new employer setting out your concerns formally
4. Raise a grievance if changes are imposed without your agreement
5. Take advice promptly — tribunal claims must be brought within three months of the breach

A Worked Example

Suppose you work in the IT department of a bank that outsources its IT function to a third-party provider. You transfer to the new provider under TUPE. Six months later, the provider wants to put all IT staff on the same contract and reduce your holiday entitlement from 30 to 25 days.

This is a TUPE-connected change. Unless the provider can demonstrate a genuine ETO reason — not simply harmonisation — any agreed change is void and you are entitled to continue receiving 30 days' holiday. If you raise a grievance and the employer ignores it, you can bring a claim at tribunal for unlawful deduction from wages or breach of contract.

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Facing a business transfer or service outsource? Upload your employment contract or any letters from your employer to fairead for a plain-English analysis of how TUPE affects your specific terms.