Key takeaways

  • TUPE (transfer of undertakings protection of employment) protects employee rights when a business is transferred to a new owner.

  • Compliance is mandatory in the U.K. and across the EU (under the acquired rights directive) during mergers, acquisitions, and outsourcing.

  • New U.K. regulations (effective July 1, 2024) allow small businesses and small-scale transfers to consult directly with employees if no reps are in place.

  • G-P Gia™ gives instant, expert-vetted HR guidance and answers all your compliance questions, including TUPE-specific inquiries.

Behind every business transfer are employees who've invested years building the company you're acquiring or selling. TUPE regulations make sure employees’ rights are protected and give stability during what could otherwise be a chaotic time.

TUPE compliance isn't optional. A single violation can turn a profitable deal into a costly legal nightmare. Whether you're buying, selling, or restructuring, here’s everything you need to know about TUPE law.

What is TUPE?

TUPE is a U.K. law that acts as a safety net for employees when a company, or a part of one, is bought or merges with another company, or changes owners. Instead of losing their job, employment is transferred automatically to the new owner and accumulated rights are protected. 

While TUPE is a U.K. regulation, it stems from the acquired rights directive (ARD) — an EU-wide framework that sets minimum protections for employees in EU member states in the context of a business transfer. 

How TUPE benefits employees:

  • Job security: The employee’s role automatically transfers to the new company.

  • Terms and conditions: All employment terms and conditions, including pay, holiday entitlement, and hours stay the same.

  • Continuous service: Length of service is preserved which is important for rights like redundancy pay or maternity leave.

  • Protection against dismissal: Employees cannot be dismissed because of the transfer itself.

While TUPE gives employees security, it also gives companies a clear blueprint to acquire a workforce legally and ethically.

When does TUPE apply?

TUPE covers two main scenarios.

1. Business transfers: This is when a company is bought by another business. This can happen through:

  • A merger between companies

  • The transfer of a business unit or division to a new owner

How TUPE is applied: Following a merger of two offices into a new entity, employees from both companies transfer with their existing rights preserved. 

2. Service provision changes: This is common in industries like IT and technology services, logistics, and professional services like HR, payroll, and customer support. It also occurs when a company outsources certain services or brings the services back in house.

How TUPE is applied:

  • Outsourcing: When a company moves IT support to an external provider, the existing team members usually transfer to the new service provider.

  • Re-tendering: When an IT support analyst is dedicated to managing a specific company's internal network and that company switches managed service providers (MSPs), the analyst’s employment transfers to the new IT firm under TUPE.

Keep in mind that TUPE may not apply in every service provision change. There are exceptions, such as when the service is for a single event or short-term task.

What are the employer's obligations under TUPE?

Compliance is mandatory. Employers have to follow strict legal requirements to make sure employees are treated fairly during transitions and their employment is protected.

Keeping employees in the loop

One of the main TUPE requirements is the duty to inform and consult affected employees. Employers have to talk to the employee about:

  • Why the change is happening

  • When it will occur

  • How it can affect their daily work life

  • What the legal, economic, and social implications are

  • Specific planned measures (or confirm if there are none)

In 2024, TUPE law became easier for smaller businesses. Employers with fewer than 50 employees — or transfers involving fewer than 10 professionals — can consult with affected employees directly. Previously, every employer, regardless of size, had to consult with employee representatives, or trade union representatives, about a transfer. The update removes the need to organize elections for representatives, prepare additional documentation, and manage representative communications.

Providing employee details

The outgoing employer has to give employee liability information (ELI) to the new employer at least 28 days before the transfer. This makes sure the new employer knows exactly what they owe regarding pay, holiday, and length of service. ELI information includes:

  • The identity and age of each transferring employee 

  • The main terms and conditions of employment (pay, hours, holiday entitlement) 

  • Information on any disciplinary action or grievances taken by or against an employee in the last two years 

  • Details of any legal actions brought by employees in the last two years or potential legal claims 

  • Information about any collective agreements (CBAs) that apply to the employees 

Pro tip: Use Gia for instant, expert-vetted HR guidance on TUPE obligations. You can ask Gia to clarify TUPE coverage, outline consultation steps, and give you compliance checklists. Try these prompts:

  • Does TUPE apply to my outsourcing project?

  • What are the steps for consulting employees under TUPE?

  • How do I handle employee data during a TUPE transfer?

How long do TUPE rights last?

There’s no expiration date for TUPE rights. TUPE regulations are designed to keep an employee’s original terms and conditions of employment in place indefinitely. This gives employees long-term stability. They can feel confident that the new employer won’t simply wait a few months and then decide to change their contract or terminate their employment after the transfer. 

For example, say a large tech firm acquires a smaller startup. The smaller startup team has a remote work policy and 30 PTO days. The large tech firm wants to harmonize the teams to make administration easier. 

Under TUPE, the tech firm can’t legally reduce PTO or change the remote work rights just because of the transfer. These rights transfer with the employees indefinitely. The only way the tech firm could change this is if the employees from the smaller startup team voluntarily agree to a new contract or if there’s a genuine economic, technical, or organizational (ETO) reason.

Termination rules and valid changes

While the goal of TUPE is to keep employees in their job, there are rules on how employment can end.

Automatic protection from dismissal

Terminating employees because of a transfer is prohibited and is deemed an automatic unfair dismissal. TUPE protection gives employees the right to challenge any dismissal that appears to be triggered solely by the business transfer.

Valid reasons for termination (ETO)

There are times when a new employer has to make redundancies or changes. For this to be legal, they need an ETO reason. 

  • Economic: Related to the company's financial performance (e.g., needing to cut costs to survive)

  • Technical: Related to new technology or equipment (e.g., a new machine doing the work of three professionals)

  • Organizational: Related to the structure of the business (e.g., having two HR departments after a merger)

Even with a valid ETO reason, employers have to follow a fair process, consult with employees, and look for alternative roles. TUPE makes sure employees aren’t at a disadvantage simply because they were transferred from another company.

TUPE in mergers and acquisitions

Knowing if a deal is covered by TUPE is important for both the buyer and the seller. This impacts everything from paying staff to long-term legal responsibilities. The effect on your employees depends on how the deal is set up:

  • Asset sales: A company buys the physical parts of a business. TUPE regulations apply automatically, and the new employer inherits an employee's contract exactly as it is.

  • Share sales: A buyer acquires company shares. TUPE isn’t triggered since the legal entity stays the same. 

Traditionally, acquiring team members in multiple countries meant you needed to set up expensive legal entities in every location. But not anymore. This is where G-P comes in.

How G-P supports your transition

With G-P EOR, you can avoid the stress of setting up new entities after a business transfer or merger. We act as the legal employer for your global team members. With us, you can onboard acquired teams in days and stay compliant with TUPE or ARD.

When questions on TUPE regulations or local employment laws arise, our global HR agent Gia can give you instant, expert-vetted answers. Gia can help you navigate TUPE by:

  • Explaining legal requirements and obligations

  • Advising on compliance and risk mitigation

  • Guiding employee consultation, information sharing, and due diligence

  • Providing template documents for communications and checklists

This support lets you focus on your team's success, without the added legal stress.

Book a demo today to see our global employment products and EOR solutions in action.

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