If you’re a business that employs staff in the UK, you can’t afford to ignore the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
These UK regulations are designed to protect employees' rights during transfers between companies.
TUPE ensures that employees retain their terms and conditions of employment, providing stability and continuity in potentially disruptive situations.
However, compliance with TUPE is not just a legal necessity; it’s a crucial aspect of maintaining trust and morale among employees. A well-managed TUPE process can facilitate a smoother transition, minimise disruptions, and uphold the rights and interests of all involved.
Preparing for TUPE is a delicate balancing act. If you’re going to get the transfer right, you need to balance legal compliance with clear and empowering internal communications.
That’s why we’ve put together a detailed TUPE transfer checklist to help UK-based employers to:
- Correctly consult with employees.
- Review necessary employment contracts.
- Identify potential risks along the way.
- Plan for the integration into the new company.
- Ensure compliance with any and all workers’ rights legislation.
We’ll also explore the importance of ongoing communication and support post-transfer, emphasising the need for continued monitoring and evaluation to address any emerging issues. By maintaining an open dialogue with employees and regularly assessing the transition, businesses can foster a positive working environment and mitigate any negative impacts.
Understanding the TUPE Transfer Process: What You Need to Include in Your Checklist
Before building a TUPE transfer checklist, you’ll need to understand the fundamentals of the process itself. For all parties involved, the TUPE transfer process breaks down as follows:
- The old employer and the new employer confirm whether TUPE applies and to which individual workers it will apply.
- Leadership gathers information about these workers and begins informing and consulting with them.
- Both organisations communicate about the process and share relevant information
- The transferor provides official notification to workers and consults with them about it
- The deal is processed, and worker contracts transfer automatically to the new employer
- Both organisations manage and support workers to ensure their rights are protected
For organisations gearing up to transfer or receive workers—and for workers themselves— it’s critical to have these steps in mind to ensure compliance and fairness for all everyone involved.
Key Items to Include in Your TUPE Checklist
Any TUPE checklist is going to need to be broken up into three constituent parts.
- Pre-transfer – The old employer needs to collect information to share with both their employees and the new employers. They also need to consult with workers.
- Mid-transfer – New employers assume ownership of and responsibility for all contractual matters involving new workers, including past and future payments.
- Post-transfer – Original and new employers must support the workers and ensure working relationships stay as stable as possible, including training and outreach.
Let’s break down the TUPE transfer checklist into these three component steps.
The Pre-Transfer Checklist
Confirming Whether TUPE is Applicable
One of the most important parts of pre-transfer preparation is confirming whether and how TUPE protections will apply (and to whom).
As noted above, TUPE applies to business transfers, which specifically include mergers and acquisitions (M&A), takeovers, and other deals wherein workers move from one company to another. The key factor to understand about business transfers is that the employer’s identity changes.
It’s worth noting that TUPE tends not to apply if the transfer is of shares and equipment only.
The other kind of TUPE transfers is a service provider change (SPC). These can be a bit more nebulous.
A service provider change could include:
- A service provided in-house is taken on by a contractor (otherwise known as outsourcing).
- An outsourced job comes to an end and the work is brought in-house (otherwise known as in-sourcing).
- A contract ends and is taken over by a new contractor (otherwise known as retendering).
Informing and Communicating with Employees
‘Inform’ basically means the old employer giving their staff the facts of the transfer. his notice needs to come far in advance of the transfer—at least four weeks before a transfer occurs, or sooner if possible. The outgoing employer must ensure this communication is clear and timely. Additionally, regular updates should be provided to all transferring employees to keep them informed about the process. It’s also worth stressing that the old employee has to inform. They need to inform any affected employee, even if they are not being transferred (i.e., having more or fewer reports, managers, or team members).
‘Consult’ then means the old employer has to ask the employee for their feedback in any changes to their working practices.
Across both the inform and consult phase, the old employer needs to consult with the relevant g employee representative.
This employee representative could be a recognised trade union or employment rep body. If there is no current recognised employee representative or trade union, you’re going to need to elect a representative to consult with.
Talking With the New Employer & Making a Transition Plan
Of course, if employees are going to enjoy a smooth and clearly signposted transfer process, old and new employers will need to work closely together.
Before any TUPE transfer, the old and the new employer will need to agree on
- Which employees are going to be transferred.
- The agreed transfer date.
The new employer may wish to determine whether they’re going to meet with the employees who are transferring and their employee reps.
Both employers will then need to work together on the transfer plan that will then be shared with all employees. You should also ensure that trade union/employee reps are included on any transfer plan.
Reviewing Employment Contracts and Terms
At the time of the business transfer or SPC itself (i.e., the closing date for the merger or buyout), impacted workers’ contracts transfer over to the new employer completely and automatically. So, both parties should be 100% clear about what that will entail in terms of employment contract terms, their employment histories, and the entitlements and liabilities that come with them. It is essential that employee liability information is thoroughly reviewed to ensure a smooth transition.
For example, workers’ employment dates will remain the same with the original company after being transferred to the new one. Incentives or entitlements tied to their length of employment will not reset. The new employer must honour them to the fullest, even if an implication would be seemingly impossible, such as a start date before the founding of the new employer’s company.
Identifying and Addressing Potential Risks
Risk management is essential during any and every TUPE transfer.
That’s why the old employer needs to share employee liability information (ELI) with prospective new employers. The latter must ensure they receive this information in a timely manner.
In particular, TUPE Regulation 11 calls for the following employee liability information to be shared:
- Identity information about the worker (name, age, etc.)
- Particulars of employment information given to the employee
- Information regarding disciplinary or grievance procedures taken
- Information concerning courts or tribunal cases open or pending
As with information provided to workers themselves, ELI and related information needs to be provided by the original employer to the new one four weeks prior to the transfer date.
The upshot for this (and the previous) item is the importance of due diligence.
Understanding Workers’ Rights
Both the transferor and the new employer need to be aware of workers’ rights, especially with respect to their contracts and continuity; these cannot be changed because of the transfer. This applies to both the old employer and the new one.
Prior to the transfer, workers have a right to prompt communication concerning the transfer, along with consultation. In addition, they have the right to continuity in their contracts, such that their original employers cannot make changes to their contracts that would then carry over to their new employers (i.e., to reduce liabilities or make contracts more company-friendly).
Then, during and after the transfer, workers have the right to have their contracts retained without any changes, except for any that the contract already allowed for or any that are favourable to and approved by them. They also have the right to retain their employment and not be dismissed because of the transfer, provided certain exceptions (see below) do not apply.
The Mid-Transfer Checklist
The TUPE transfer itself is arguably the most nerve-wracking bit. Here’s what your actual transfer checklist should look like.
Processing the Transfer
On the date of the transfer, employees automatically transfer to the new employer along with their length of service and employment contracts.
The new employer must inform the transferred employees in writing about the change of employer, confirming that their length of service and contractual rights remain unchanged. This information should be included in the written terms of employment.
Ensuring Compliance With Transferred Terms
Employees’ terms and conditions of employment transfer to the new employer. This includes job titles, roles, pay, bonuses, commissions, sick leave, holiday entitlements, allowances, insurance benefits, and any terms agreed through collective agreements. The new employer must honour these terms to avoid breaches of contract, which could lead to employment tribunal claims.
Handling Pensions and Collective Bargaining
Pensions built up to the transfer date are protected. If the old employer contributed to personal pensions, the new employer must continue these contributions. Workplace pensions may not transfer, but the new employer must provide a reasonable alternative. Collective bargaining agreements and trade union recognition transfer under TUPE if the transferred employees retain a separate identity within the new organisation.
Managing Outstanding Holiday and Pay
The new employer becomes responsible for any outstanding wages, bonuses, and holiday entitlements from the transfer date. This includes any arrangements to carry over holiday from previous leave years. If any ELI provided by the old employer is inaccurate, the new employer may claim against the old employer in an employment tribunal.
Handling Redundancies and Dismissals
In almost all cases, employees cannot be dismissed directly because of the transfer or for a reason principally related to it. TUPE Regulation 7 stipulates that such dismissals will be treated as unfair dismissal (per Part X of the Employment Right Act) and met with applicable enforcement.
Dismissals (and changes to contracts) can be made if a significant economic, technical, or organisational reason is present. For example, if the new employer can document a significant downturn in overall performance after a transfer, there may be grounds for fair dismissals.
TUPE protections may not apply in the same ways if the transferor is insolvent. But, in all cases, the new employer needs to be aware of these restrictions on dismissal flexibility.
The Post Transfer Checklist
Ongoing Communication and Support
Both the original and new employers must continue to inform and consult workers if further changes occur. Maintaining an open dialogue with employees and regularly assessing the transition can help foster a positive working environment and mitigate any negative impacts.
The new employer can play a key role here. It’s important to ensure that new employees feel settled within the new organisation. We’d recommend doing any of the following:
- Introducing transferred employees to their new line managers and new team members
- Hold plenty of onboarding meetings to make sure that transferred employees feel integrated into the organisation
- Create a structured induction programme that introduces employees to any new rules, policies they need to know.
- Make sure that any changes in terms and conditions of employment are written down.
Monitoring and Evaluating the TUPE Transition
After the transfer, it’s essential to monitor and evaluate the process continuously. This includes ensuring that working relationships remain stable, providing necessary training, and addressing any emerging issues promptly. Continued consultation beyond the minimum requirements can enhance productivity and ensure a successful reorganisation.
Ensuring Continued Compliance With TUPE Regulations
Both the original and new employers must remain vigilant to comply with all aspects of the transfer. Partnering with an Employer of Record provider like Omnipresent, can help streamline the process and ensure that all legal requirements are met, protecting the rights of all impacted workers.
Importantly, these recommendations apply to both the original employer and the new one. For the former, special attention should be paid to the remaining employees who were not transferred but are still impacted by such moves—i.e., managers with smaller teams but comparable workloads.
