What TUPE actually does
When a business or part of a business changes hands, or a service contract moves from one provider to another, the employees assigned to it transfer automatically to the new employer.
They keep their continuous service, their terms, and their existing contracts. Nothing resets. Someone with eleven years' service arrives with eleven years' service.
It happens by operation of law. There is no opting out of it, and no clever wording in the sale agreement that makes it not apply.
The moment a sale, purchase or contract change is on the table, ask whether TUPE applies. Ask early, not at completion.
The two things people get most wrong
The first is thinking you can tidy up the headcount before or after the transfer. A dismissal where the transfer is the reason is automatically unfair, save in limited circumstances. Buying a business and letting two people go because you do not need them is exactly the situation that catches people.
The second is changing terms afterwards. Harmonising everyone onto your contracts, so the new arrivals match your existing team, sounds like common sense. It is generally void where the transfer is the reason for the change, even where the employee agrees, and even where the new terms are better.
Both sides have to inform and consult
The outgoing employer and the incoming one both have duties to inform, and in some cases consult, employee representatives about the transfer and any measures envisaged.
Get this wrong and there is a protective award of up to thirteen weeks' pay per affected employee. That is per employee, not in total, which is how a small oversight becomes a large number.
There are simpler routes for very small businesses in some circumstances, but they still require you to do it, and to do it in good time.
Diarise the consultation before you agree a completion date. It is the thing most often left too late.
What the buyer should be asking for
Before you commit, ask for the employee liability information: who transfers, their terms, their service dates, any live disciplinary or grievance matters, and any claims in the last twelve months.
The seller has to provide it, and you inherit the problems along with the people. A live grievance, an unresolved absence case, or an underpayment issue becomes yours on day one.
This is not paperwork for its own sake. It is how you find out what you are actually buying.
Ask for the employee liability information early enough that it can still affect the price.
The honest advice
TUPE is one of the few areas where I would say get proper advice before you do anything, rather than after.
Not because the principles are complicated, they are not, but because the consequences of getting the sequence wrong are difficult and expensive to undo. Unwinding a botched transfer is far harder than doing it properly first time.
Your solicitor will handle the sale agreement. The people side needs someone looking at it too, and the two need to line up.
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Frequently asked questions
Does TUPE apply if I am only buying the assets?
It can. The question is whether an economic entity retaining its identity is transferring, not what the sale agreement calls it. Asset purchases frequently do trigger TUPE, so check rather than assume.
Can I make redundancies after buying a business?
Only where the reason is genuinely unconnected to the transfer, and that is a high bar. Doing it because you have surplus staff after the purchase is the classic trap. Take advice on timing and reasoning before you act.
The staff want to move onto our better contracts. Can they?
Changes where the transfer is the reason are generally void even with agreement, and even where the new terms are more generous. There are limited routes to varying terms, but this needs advice rather than goodwill.
How long before completion should we consult?
In good time, which in practice means as early as you sensibly can. Leaving it until the week of completion is the most common failing, and the protective award is per employee.
Key takeaways
- Employees transfer automatically, keeping service and terms, and you cannot contract out of it
- A dismissal where the transfer is the reason is automatically unfair
- Changing terms to harmonise afterwards is generally void, even if the employee agrees
- Both sides must inform and consult, with a protective award of up to 13 weeks' pay per employee
- Ask for employee liability information early enough that it can still affect the price
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