TUPE Transfers Explained: A Small Business Owner's Guide

TUPE sounds like a sneeze, but getting it wrong can cost you thousands

Picture this. You've won a cleaning contract and you're lining up kit for Monday. Then you find out you might also be taking on the cleaners. TUPE strikes at the exact moment you have a hundred other things to sort.

Here's the calm bit. TUPE is there for one reason: to stop employees being treated as disposable when a business or service moves. Once you see what it protects, the rules click into place.

This guide explains what TUPE is, when it applies, what you must do, and the slip-ups that trip up SMEs on both sides of a deal. Hazel, our Chief Wellbeing Officer, transferred to KUHR under what she insists were very favourable terms, namely a bed by the radiator. For everyone else, the terms come with paperwork.

Quick Answer Box

• Do this: work out early whether TUPE applies, then inform and consult affected staff before the transfer date.
• Avoid this: changing transferred contracts to match your existing team, or dismissing people, because of the transfer.
• Write down: who transfers, their existing terms, the consultation you ran, and the Employee Liability Information shared between employers.

What is TUPE in plain English?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. The core idea is simple.

When the part of a business someone works in moves to a new employer, that person moves with it. They keep their job, their terms and conditions, and their continuous service, as if nothing had changed for them personally. The new employer steps into the shoes of the old one.

That means the new employer inherits people, length of service, contractual rights, and liabilities. You cannot quietly leave the awkward bits behind.

When does TUPE actually apply?

There are two routes that trigger TUPE. You need to recognize both.

A business transfer

This is where a business, or a clearly identifiable part of it, is sold or transferred as a going concern. In short, the new owner takes on something that keeps running as the same operation: the people, the customers, the activity.

Buying the assets of a working business usually triggers TUPE. Buying the shares in a company usually does not, because the employer stays the same, only its ownership changes. That distinction matters, so check it before you sign anything.

A service provision change

This is the one that catches SMEs by surprise. TUPE can apply when you:

• outsource work to a contractor for the first time
• switch from one contractor to another
• bring outsourced work back in house

So if you win a cleaning, catering, IT support or maintenance contract from another provider, you may be inheriting their staff. The same is true if you lose one.

For more on whether the people doing your work are even employees in the first place, see our guide on whether your contractor is really an employee.

What the law says protects employees

Once TUPE applies, several protections kick in automatically.

• Automatic transfer. Affected employees move to the new employer on their existing terms and conditions. Nobody has to be re-hired or re-offered a job.
• Continuity of service. Their length of service carries over, which affects redundancy pay, notice and other service-related rights.
• Protected terms. Pay, holiday, hours and contractual benefits transfer across. The new employer cannot simply downgrade them.
• Protection from dismissal. A dismissal is automatically unfair if its main reason is the transfer.
• Information and consultation. Employees have the right to be informed and, where measures are planned, consulted before the transfer.

These sit on top of usual employment rights. They do not replace them.

The step-by-step process for an SME

Whether you are the seller (the transferor) or the buyer (the transferee), the shape of the process is similar.

Step 1: Confirm whether TUPE applies

Do not assume. Look at what is actually moving. Is it a going concern, or a service contract changing hands. If you are unsure, get advice early, because the answer drives everything else.

Step 2: Identify the affected employees

Work out who is assigned to the part of the business or the contract that is transferring. This is not always obvious for people who split their time across roles. Get the list right early.

Step 3: Share Employee Liability Information

The outgoing employer must give the incoming employer the Employee Liability Information. That includes identities, ages, terms and conditions, disciplinary and grievance history, and any claims. It must be provided at least 28 days before the transfer. This is how the buyer learns what it is taking on. See the government guidance on TUPE for the current rules: government guidance on TUPE.

Step 4: Inform and consult

Both employers must inform the appropriate representatives of affected employees about the transfer: that it is happening, roughly when, why, and the likely implications. Where either side plans measures, they must consult on those too. Measures are any planned changes that affect people, such as hours, location, or ways of working.

You can consult employees directly in some cases. Since July 2024, if you employ fewer than 50 people, or fewer than 10 employees are affected by the transfer, and there are no existing representatives, you may consult directly. Check the latest guidance or ACAS.

Step 5: Complete the transfer

On the transfer date, the affected employees become the new employer's staff, on their existing terms. The new employer takes on their rights and the related liabilities from that point.

Step 6: Manage life after the transfer carefully

Resist the urge to tidy up contracts straight away. Changes connected to the transfer are very hard to make lawfully. More on that below. Instead, focus on a clean handover, payroll setup, and a proper welcome meeting.

ETO reasons: the only real room to move

Changes to terms, and transfer-related dismissals, are void or automatically unfair if the reason is the transfer itself. The narrow exception is an ETO reason: an economic, technical or organisational reason entailing changes in the workforce.

• Economic: genuine cost pressures that require fewer roles
• Technical: a new system or process that changes how work is done
• Organisational: a restructure that changes roles or numbers

It must entail changes in the workforce, usually numbers or functions. Harmonising the transferred staff's pay to match your existing team almost never qualifies, because the reason is the transfer. This is the single biggest area where well-meaning employers go wrong.

For any dismissal, follow a fair process as well. The same fairness rules still apply. Our piece on why a small business needs an HR audit is a useful reminder of how easily process slips when things move quickly.

Common mistakes SMEs make

• Assuming a share sale triggers TUPE. It usually does not. Asset and business sales usually do. Mixing these up leads to the wrong plan.
• Forgetting service provision changes count. Winning or losing a contract can move staff. People miss this and inherit or abandon employees by accident.
• Skipping consultation. It feels like a formality, but failing to inform and consult can mean a protective award of up to 13 weeks' pay per affected employee. On even a small team that adds up fast. See ACAS.
• Changing contracts to harmonise. The classic trap. Aligning the new joiners with your existing terms is almost always transfer-related and therefore void.
• Dismissing to make room. A dismissal whose main reason is the transfer is automatically unfair, full stop.
• Poor Employee Liability Information. As a buyer, vague information leaves you exposed. As a seller, incomplete information can land you with a claim.

What to write down

Good records protect both sides if anything is challenged later. Keep:

• a clear note of why you concluded TUPE did or did not apply
• the list of affected employees and what they are assigned to
• the Employee Liability Information shared, and when
• who you informed and consulted, the dates, and what was discussed
• any measures planned and the consultation about them
• the transferred terms and conditions, captured as at the transfer date
• the reason for any later changes or dismissals, and the process followed

A short script for telling staff

Affected employees are usually anxious, so keep the first message calm and clear:

> I want to update you on a change that affects your role. The part of the business you work in is transferring to [new employer] on [date]. Under rules called TUPE, you will move across on your existing terms and conditions, and your length of service is protected, so you are not starting from scratch. We will hold a meeting to explain what this means, answer your questions, and consult you properly before anything happens. Nothing changes today, and I will put the key points in writing.

Then follow through with the meeting and the written summary. Silence is what breeds rumour.

Where to get the detail right

TUPE rewards employers who plan early and punishes those who improvise. The regulations are technical, the deadlines matter, and the consultation duties apply to buyer and seller alike.

If a transfer is on the horizon, or you have just realised one already happened and the paperwork is thin, an HR Health Check is a sensible first move. We can sense-check whether TUPE applies, who transfers, and what consultation you owe, before it becomes a tribunal claim rather than a tidy handover. If you would rather talk it through first, book a discovery call and we will point you in the right direction.

Get TUPE right and a transfer is just a busy fortnight. Get it wrong and it is a very expensive education.