What is TUPE?

TUPE is an area of employment law that becomes relevant when a business is sold, a contract changes hands, or a service is outsourced or insourced. Many founders encounter the term for the first time in a transaction or tender and are uncertain what obligations it creates. Understanding what TUPE is helps founders identify when it applies and take appropriate advice in time.

TUPE — the Transfer of Undertakings (Protection of Employment) Regulations — protects employees' rights when the business or undertaking they work for transfers to a new employer. Where TUPE applies, employees transfer automatically to the new employer on their existing terms and conditions of employment, and their continuous service is preserved. The incoming employer takes on the employment contracts and associated liabilities of the transferring employees. Dismissing employees in connection with a TUPE transfer is automatically unfair in most circumstances.

TUPE imposes obligations on both the transferring and receiving employer, including a requirement to inform and consult employee representatives before the transfer. Identifying whether TUPE applies and managing the process correctly requires specialist employment law advice — the consequences of getting it wrong for the acquiring employer can be significant. Our guide to TUPE for UK founders covers when it applies and what both parties need to do.