TUPE in 2026: A Practical Guide for Employers

TUPE remains one of the most important, and often misunderstood, areas of employment law. Whether you’re acquiring a business, involved in a contract retender, or managing organisational change, understanding your obligations can help avoid costly mistakes and potential claims.

The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly referred to as TUPE, are designed to protect employees when the business they work for changes hands or when services are transferred between providers. At its core, TUPE ensures that employees are not disadvantaged simply because their employer changes.

When Does TUPE Apply?

TUPE generally applies in two situations: business transfers and service provision changes.

A business transfer occurs when an economic entity moves from one employer to another but continues operating in substantially the same way. This could include the sale of a company, the purchase of part of a business, or the transfer of a business operation between organisations.

TUPE can also apply when services move between providers. Common examples include outsourcing work to a contractor, switching from one contractor to another, or bringing previously outsourced services back in-house. This is particularly relevant in sectors such as facilities management, cleaning, catering, security and IT support.

However, TUPE does not apply automatically in every case. Factors such as whether there is an organised grouping of employees carrying out the service, and whether the activities remain fundamentally the same after the transfer, must be carefully considered.

What Happens to Employees?

When TUPE applies, employees assigned to the transferring business or service move automatically to the new employer. Their continuity of employment is preserved, their existing terms and conditions generally remain unchanged, and most employment rights and liabilities transfer with them.

In practical terms, the incoming employer steps into the shoes of the outgoing employer. Employees do not need to reapply for their roles, and their length of service continues uninterrupted. This can have significant implications for redundancy rights, unfair dismissal protection and other statutory entitlements.

Understanding Transferred Liabilities

One of the biggest risks for purchasers and incoming contractors is the extent of the liabilities they may inherit. These can include ongoing grievances, contractual disputes, discrimination claims and unfair dismissal claims.

For this reason, thorough employment due diligence is essential before any acquisition or retendering exercise. While indemnities can be negotiated between the parties to allocate risk, they do not alter employees’ statutory rights.

Can Terms and Conditions Be Changed?

A common misconception is that employers can quickly harmonise terms and conditions following a TUPE transfer. In reality, changes connected to the transfer itself are heavily restricted.

Any variation is likely to be unlawful unless it is entirely unrelated to the transfer or can be justified by an Economic, Technical or Organisational (ETO) reason that involves changes in the workforce. Even then, employers should proceed cautiously and seek appropriate advice before implementing changes.

Redundancies and TUPE

TUPE does not prevent redundancies, but it does make transfer-related dismissals particularly risky. Where the sole or principal reason for dismissal is the transfer itself, the dismissal is likely to be automatically unfair.

That said, redundancies may still be lawful where there is a genuine ETO reason, such as business restructuring, technological changes or a reduced need for employees. Careful planning and a clearly documented business rationale are essential.

The Duty to Inform and Consult

Both the outgoing and incoming employer have obligations to keep affected employees informed about the transfer. This includes explaining when the transfer will take place, why it is happening and whether any measures are expected to affect employees.

Where proposed changes are likely to impact staff, consultation obligations may also arise. Failure to comply can be expensive, with Employment Tribunals able to award up to 13 weeks’ gross pay per affected employee.

Recent Changes for Smaller Businesses

Recent legislative changes have simplified some consultation requirements for smaller businesses and transfers involving fewer employees. While these reforms may reduce administrative burdens, they do not change the fundamental protections TUPE provides. Employers should therefore continue to approach transfers with care and seek specialist advice where necessary.

Practical Steps for Employers

The key to managing a TUPE transfer successfully is preparation. Employers should identify at an early stage whether TUPE is likely to apply, carry out thorough employment due diligence, review potential liabilities and ensure appropriate contractual protections are in place. Planning employee communications, keeping clear records and obtaining specialist legal advice before making changes to contracts or staffing structures can also significantly reduce risk.

Final Thoughts

TUPE is designed to protect employees during periods of business change, but for employers it can bring significant legal and commercial challenges. Understanding the rules, identifying risks early and planning carefully can help ensure a smooth transition while minimising exposure to costly disputes.

Whether you are acquiring a business, losing a contract or taking over a service from another provider, early specialist advice is often the best investment you can make.

If you need expert advice or representation, please contact Farleys’ HR & Employment Law team on 01254 606 008 or complete our online enquiry form for support tailored to your situation.