TUPE moves employees automatically, whether or not anyone wants it to. The three numbers to know are 28 days for employee liability information, 13 weeks' pay as the ceiling on a protective award, and £500 per employee as the minimum award where liability information is not given. None of them is negotiable by contract.
When TUPE applies
Regulation 3 of the 2006 Regulations covers two quite different things, and the second catches more businesses than the first.
A business transfer. A transfer of an undertaking, business or part of one situated in the UK immediately before the transfer, where there is a transfer of an economic entity that retains its identity. This is the classic sale of a business as a going concern.
A service provision change. Three scenarios, and between them they cover almost all outsourcing:
- Outsourcing. Activities cease to be carried out by a client on its own behalf and are carried out instead by a contractor on the client's behalf;
- Retendering. Activities move from one contractor to a subsequent contractor for the same client;
- Insourcing. Activities cease to be carried out by a contractor and are carried out instead by the client on its own behalf.
Regulation 3(3) then imposes three conditions. There must be an organised grouping of employees situated in Great Britain whose principal purpose is carrying out the activities. The client must intend that the activities continue after the change, and not be tied to a single specific event or task of short-term duration. And the activities must not consist wholly or mainly of the supply of goods for the client's use.
The "organised grouping" condition is where most arguments happen. A team deliberately assembled to serve one client is a grouping; people who happen to spend time on that client's work among others usually are not.
What transfers
Contracts of employment transfer automatically, with continuity of service and accrued rights and liabilities. The transferee inherits what the transferor had, including liabilities it knew nothing about — which is why the diligence matters more than the drafting.
Dismissal and changing terms
Regulation 7 makes a dismissal automatically unfair where the sole or principal reason for it is the transfer.
The exception is an economic, technical or organisational reason entailing changes in the workforce — the ETO defence. Where the sole or principal reason is an ETO reason, the automatic unfairness rule does not apply and the dismissal is instead treated as redundancy or as some other substantial reason, to be assessed for fairness in the ordinary way.
Regulation 7(3A) is worth knowing because it is a genuine widening: "changes in the workforce" includes a change to the place where employees are employed to carry on the business. Relocation can therefore be an ETO reason, which was not always the position.
Two points people get wrong. An ETO reason is not a free pass — it converts automatic unfairness into ordinary unfairness, so the process still has to be fair. And harmonising terms across a workforce after a transfer is not an ETO reason, because it entails no change in the workforce.
The information duties
Employee liability information. Regulation 11 requires the transferor to give the transferee the identity and age of each employee, the section 1 employment particulars, any disciplinary or grievance action in the previous two years, any court or tribunal claims in the previous two years or reasonably believed likely, and any collective agreement that will have effect after the transfer. Regulation 11(6) requires it "not less than 28 days before the relevant transfer or, if special circumstances make this not reasonably practicable, as soon as reasonably practicable thereafter."
Regulation 12 sets the remedy at not less than £500 per employee in respect of whom the transferor failed to comply, unless the tribunal considers it just and equitable to award less, having regard to the transferee's loss and to any contractual allocation of liability between the parties.
Inform and consult. Regulation 13 requires both employers to inform and, where measures are envisaged, consult appropriate representatives. A complaint goes to the tribunal within three months beginning with the date the transfer is completed, and regulation 16(3) caps appropriate compensation at "such sum not exceeding thirteen weeks' pay".
The small employer route
Since 1 January 2024, regulation 13A allows direct consultation in more cases. It applies if, at the time the employer must give information under regulation 13(2), either the employer employs fewer than 50 employees, or there are fewer than 10 transferring employees. Where it applies and there are no existing appropriate representatives, the employer may comply "as if each of the affected employees were an appropriate representative".
That is a meaningful simplification. A 200-person business transferring a team of six no longer has to run an election, because the second limb is satisfied on the size of the transfer rather than the size of the business.
Running a transfer without incident
Diarise backwards from completion: 28 days for liability information is the binding constraint, and it is routinely missed on deals that move quickly. Get the information in the statutory categories rather than whatever the HR system exports. Decide early whether regulation 13A applies, because the alternative takes weeks. Record the reason for any dismissal contemporaneously, since the ETO analysis is judged on what the reason actually was. And price the inherited liabilities rather than relying on an indemnity you may have to litigate.
Acumon supports transactions and their people costs through financial due diligence, outsourced payroll and payroll audit work, with buying a business support on the deal itself. If a transfer completes in under four weeks, the employee liability information deadline has already been missed — plan the disclosure around that.