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When a business changes owner, its employees may be protected under the Transfer of Undertakings (Protection of Employment) regulations (TUPE).

TUPE protection

TUPE applies to employees of businesses in the UK.

The business could have its head office in another country, but the part of the business that鈥檚 transferring ownership must be in the UK.

The size of the business does not matter.

When TUPE applies:

• the employees鈥� jobs usually transfer over to the new company - exceptions could be if the employees are made redundant or in some cases where the business is insolvent
• their employment terms and conditions transfer
• continuity of employment is maintained

When TUPE applies

There are 2 types of transfer protected under TUPE regulations:

• business transfers
• service provision changes

Transfers within the public sector are not usually covered by TUPE but some transfers from the public sector into the private sector are. However, public-sector employees get similar protection. Find out more about staff transfers in the public sector.

Business transfers

This is where a business or part of a business moves from one employer to another. This can include mergers where 2 companies close and combine to form a new one.

The identity of the employer must change, to be protected under TUPE during a business transfer.

Service provision changes

This is when:

• a service provided in-house (for example cleaning, workplace catering) is awarded to a contractor
• a contract ends and is given to a new contractor
• a contract ends and the work is transferred in-house by the former customer

Employees are not protected under TUPE if the contract is:

• for the supply of goods for the company鈥檚 use (for example a restaurant changing food suppliers)
• for a single event or short-term task (for example a catering company being used for a large corporate event)

Only the employees who can be clearly identified as providing the service being transferred are protected.

Before a transfer of ownership happens, employers must tell the trade union or employee representatives:

• that the transfer is happening, when it鈥檚 happening and why
• how the transfer will affect them
• whether there鈥檒l be any reorganisation
• how many agency workers they鈥檙e using and what types of work they are doing

Employers can be penalised if they do not do this.

Trade union representatives

If there鈥檚 a trade union in the workplace, the employer must inform and consult with the representatives from the union.

Employee representatives

If there鈥檚 no trade union the employer must inform and consult other employee representatives.聽

If there are no employee representatives

Employers can inform and consult directly with their employees if they have fewer than 10 employees.聽

For transfers completing on or after 1 July 2024, employers can inform and consult directly with their employees if they either:

• have fewer than 50 employees
• are transferring fewer than 10 employees聽

Otherwise, there must be an election to select employee representatives.

Electing employee representatives

The employer should:

• make sure the election is fair
• decide how many people are needed to represent the interests of everyone affected
• decide if affected employees should be represented as one workforce or in groups
• decide how long the representatives need to be in place

They should also make sure that:

• the employee representatives are people who are affected by the transfer
• no affected employee is unreasonably excluded from standing for election
• all affected employees at the time of the election are entitled to vote
• employees can vote for as many candidates as there are positions to be filled
• if possible, voting is done in secret
• votes are accurately counted

If you鈥檙e an employee representative you have the same rights as a trade union representative to help you carry out your role.

Under TUPE, the new employer takes over employees鈥� employment contracts, including:

• all the previous terms and conditions of employment
• any failures of the previous employer to observe employees鈥� rights (so employees could make a claim for discrimination against the new employer, even if it took place before the transfer)
• holiday entitlement
• period of continuous employment - an employee鈥檚 start date is the same as before the transfer, so continuous employment is not broken
• any collective agreements previously made

If an employee does not want to work for the new employer

Employees can refuse to work for the new employer. This is the same as resigning - they will not normally be able to claim unfair dismissal or redundancy pay.

Notice is not required. The employee simply tells the employer, or the new employer, before the transfer happens. Employment then ends at the time of transfer.

Changing an employment contract

TUPE regulations mean employees should not lose their existing employment rights.

Before the transfer

If the employer knows an employee is transferring to another company, they cannot normally change the employee鈥檚 terms and conditions to make them the same as those of the new company - even if the employee agrees to the change.

After the transfer

The new employer cannot change an employee鈥檚 terms and conditions if the reason is the transfer itself.

The new employer can change an employee鈥檚 terms and conditions if the reason is an 鈥榚conomic, technical or organisational reason鈥� (ETO) involving changes in the workforce or workplace, such as a result of redundancies or a move from a managerial to a non-managerial position. The employee needs to agree to this change.

鈥楨conomic鈥� reasons are to do with how the company is performing.

鈥楾echnical鈥� reasons are to do with the equipment or processes the company uses.

鈥極rganisational鈥� reasons are to do with the structure of the company.

Positive changes

Employers can improve employees鈥� terms and conditions if they agree. For example, they might want to increase the amount of holiday so that it鈥檚 the same for everyone.

An employer cannot normally impose changes - they have to be agreed by the employees or their representatives.

Dismissals

Employers can dismiss employees for an ETO reason involving changes in the workforce, for example redundancies. The normal rules around fair dismissals will still apply.

Collective agreements

Collective agreements in place before the date of the transfer will apply.

Collective agreements from the date of transfer will not apply if the new employer has not taken part in the process.

Employers can renegotiate terms and conditions in collective agreements after 1 year if the change is not less favourable to the employee.

Pension rights

Employees鈥� company pension rights earned up to the time of a transfer are protected, but the new employer does not have to continue an identical pension.

After the transfer

When the transfer is complete, employees should make sure they get an up-to-date written statement of employment, giving the name of the new employer and saying that their terms and conditions have not changed.

Employees might get a P45 if their tax records are being updated.

The new employer cannot make employees redundant just because they were transferred from another employer.

The new employer can consult about redundancies before the transfer if the old employer agrees.

If an employee is made redundant for an 鈥榚conomic, organisational or technical鈥� reason involving changes to the workforce, they may be entitled to a redundancy payment.

An employer must provide the new employer with information about employees. This normally includes:

• name
• age
• main details of employment
• disciplinary action taken against employees in the last 2 years
• grievances raised by employees in the last 2 years
• legal action taken by employees against the employer in the last 2 years
• potential legal action the employer thinks employees might raise

The employer must provide the information at least 4 weeks before the transfer.

If the employer is insolvent and the business is being transferred or taken over by another company, the protection employees get is different from in a normal transfer.

The employees are unlikely to be protected under TUPE if the business is closing down. However, TUPE regulations will normally apply if it鈥檚 being rescued and taken over or transferred.

If employees are owed money

Employees have rights if their employer is insolvent and owes them money. Employees can claim for this whether they鈥檙e protected under TUPE or not.

In a TUPE-protected transfer, the new employer must pay any amount left over after employees have been paid from the government鈥檚 National Insurance fund.

Changes to employees鈥� terms and conditions

Employees鈥� pay can be reduced or their other terms and conditions changed after the transfer. This is allowed if it will prevent job losses.

Any changes must be agreed with employee or trade union representatives.

Any agreement cannot break statutory employment rights. For example, employees cannot be paid below the National Minimum Wage.

Employees of a UK business who are based outside the UK could still be protected by TUPE.

In business transfers, if a business has an 鈥榰ndertaking鈥� in the UK (for example building, assets, fixtures and fittings, employees) but an employee spends most of the working week outside the UK, it鈥檚 likely they鈥檙e protected.

In service provision changes, there must be an organised group of employees in England, Scotland or Wales to qualify for TUPE protection.

Both employers and employees can get confidential help and advice on employment rights from .

Employees can also talk to or their trade union representative.

For more detailed information, read Employment rights on the transfer of an undertaking.

Employment tribunals

If an employee feels they have been dismissed unfairly, or feel forced to resign, they may be able to complain to an employment tribunal.