Consulting and informing

Before a transfer of ownership happens, employers must tell the trade union or employee representatives: that the transfer is happening, when it’s happening and why how the transfer will affect them whether there’ll be any reorganisation how many agency workers they’re using and what types of work they are doing Employers can be penalised if they do not do this. Employers must consult employee representatives about anything to do with the transfer that would affect the employees (for example reorganisation). They should try to gain agreement about these changes. Trade union representatives If there’s a trade union in the workplace, the employer must inform and consult with the representatives from the union. Employee representatives If there’s no trade union the employer must inform and consult other employee representatives. If there are no employee representatives Employers can inform and consult directly with their employees if they have fewer than 10 employees. 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 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’re an employee representative you have the same rights as a trade union representative to help you carry out your role.

Transfers of employment contracts

Under TUPE , the new employer takes over employees’ employment contracts, including: all the previous terms and conditions of employment any failures of the previous employer to observe employees’ 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’s start date is the same as before the transfer, so continuous employment is not broken any collective agreements previously made It’s a breach of contract if the new employer does not meet the terms of the employment contract. 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. If an employee’s working conditions are significantly worse because of the transfer, they can object to the transfer, or resign and claim unfair dismissal. 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’s 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’s terms and conditions if the reason is the transfer itself. The new employer can change an employee’s terms and conditions if the reason is an ‘economic, technical or organisational reason’ (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. ‘Economic’ reasons are to do with how the company is performing. ‘Technical’ reasons are to do with the equipment or processes the company uses. ‘Organisational’ reasons are to do with the structure of the company. Employers can make changes if the employee’s existing contract allows for those changes. But the transfer itself cannot be the reason for change. Positive changes Employers can improve employees’ terms and conditions if they agree. For example, they might want to increase the amount of holiday so that it’s 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’ 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 ‘economic, organisational or technical’ reason involving changes to the workforce, they may be entitled to a redundancy payment. Example After a transfer, a new employer has to close down part of a company because it’s not performing. This means the business does not need people with a certain specialist skill, and therefore makes an employee redundant. The employee could be entitled to a redundancy payment.

Information about employees during transfers

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’s 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’re 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’s National Insurance fund. Changes to employees’ terms and conditions Employees’ 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 working abroad

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 ‘undertaking’ in the UK (for example building, assets, fixtures and fittings, employees) but an employee spends most of the working week outside the UK, it’s likely they’re protected. In service provision changes, there must be an organised group of employees in England, Scotland or Wales to qualify for TUPE protection. Example A team is doing website maintenance under a contract that’s coming to an end and someone else is taking it over. If the contract is performed in the UK, but one team member works from home in a country other than England, Scotland and Wales, it’s likely they’re protected. If the whole team works from home in a country other than England, Scotland or Wales, the members would not be protected as there’s no organised group of employees in one of those countries.

Both employers and employees can get confidential help and advice on employment rights from Acas (the Advisory, Conciliation and Arbitration Service) . Employees can also talk to Citizens Advice 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 .

Business transfers, takeovers and TUPE

Overview

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’s transferring ownership must be in the UK.

The size of the business does not matter.

When TUPE applies:

the employees’ 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

To find out if TUPE applies to your transfer, talk to Acas (the Advisory, Conciliation and Arbitration Service), Citizens Advice or, if you’re an employee, your trade union representative.

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’s 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.

Example

A courier collects and delivers for a business, but the packages are picked up or delivered by a number of different couriers on an ad hoc basis. The courier is not protected under TUPE.

A cleaner is employed by a company that decides to use an outside cleaning company instead. They’re likely to be protected under TUPE.

View a printable version of the whole guide

Business transfers, takeovers and TUPE

Overview

TUPE protection

When TUPE applies

Business transfers

Service provision changes

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Business transfers, takeovers and TUPE

Overview

TUPE protection

When TUPE applies

Business transfers

Service provision changes

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