When Does TUPE Apply?

TUPE can apply when a business or part of a business changes employer, and when responsibility for certain services moves between organisations.

There are two broad situations to investigate: a business transfer and a service provision change. Those categories can overlap, and neither should be decided simply by what the commercial transaction has been called.

That means an outsourcing exercise is not automatically a TUPE transfer. Nor does calling something a restructure, contract change or business sale prevent TUPE from applying.

The sensible starting point is to establish what is moving, who currently performs it, how the work is organised and what will happen after the change.

What is TUPE?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations.

Where TUPE applies, employees who are within the transfer will generally move automatically to the new employer with their continuity of employment and most existing contractual rights preserved.

The regulations also create specific protections concerning dismissal, changes to terms and conditions, and information and consultation.

TUPE is therefore not simply a paperwork exercise between two businesses. Whether it applies can determine who employs particular people after a transaction and what employment liabilities move with them.

The two main TUPE situations

Business transfers

A business transfer can occur where a business, undertaking or part of one passes from one employer to another.

The central legal question is whether there is a transfer of an economic entity which retains its identity. An economic entity can include an organised grouping of people and resources pursuing an economic activity.

Whether its identity has been retained depends on the circumstances as a whole.

Service provision changes

TUPE also contains specific rules dealing with changes in the provision of services. These can potentially cover:

• outsourcing work that was previously carried out in-house;
• bringing outsourced work back in-house; and
• replacing one contractor with another.

For this type of transfer, additional conditions apply.

Among other things, there normally needs to be an organised grouping of employees in Great Britain whose principal purpose is carrying out the relevant activities for the client, and the activities carried out after the change must remain fundamentally the same.

When does a business transfer qualify?

Not every sale involving business assets produces a TUPE transfer.

The analysis looks at the entity before and after the transaction. Relevant factors can include its workforce, assets, organisation, customers, operating methods and the activities being carried out.

There is no rule that physical assets must always transfer. In a labour-intensive business, the workforce and organisation of the activity may be particularly important.

Conversely, transferring equipment on its own will not necessarily amount to the transfer of an economic entity.

The question is whether an identifiable economic entity has transferred and retained its identity.

A straightforward share sale is different. If the shareholders of a limited company change but the company itself remains the employer, there is normally no TUPE transfer merely because its ownership has changed.

A business or asset sale from one legal employer to another may produce a different result.

When can TUPE apply to outsourcing?

TUPE may apply where an organisation stops performing an activity itself and appoints a contractor to perform it.

The label “outsourcing” is not enough.

Employers should establish what activities are being outsourced and whether there was, immediately before the change, an organised grouping of employees whose principal purpose was carrying out those activities for the client.

An organised grouping does not necessarily require a large team. It can potentially consist of one employee.

However, the existence of one person who happens to spend substantial time working for a particular client does not automatically answer the legal question. The organisation and purpose of the work remain important.

When can TUPE apply to insourcing?

The same service provision rules can potentially apply in reverse.

If a client terminates an outsourced arrangement and brings substantially the same activities back in-house, employees assigned to the relevant organised grouping may transfer to the client.

Again, the analysis should focus on the activity rather than the contractual label.

Employers should compare what the outgoing contractor actually does with what the client intends to do after insourcing.

If the nature of the service is fundamentally changed, the service provision change test may not be satisfied.

When can TUPE apply to a new contractor?

TUPE can potentially apply where a client retenders a service and appoints a replacement contractor.

It does not follow that every retendering exercise triggers TUPE.

For a service provision change, the client generally needs to remain the same, the relevant activities need to remain fundamentally the same and the required organised grouping must exist before the change.

This becomes more difficult where the incoming contractor proposes to deliver the service in a materially different way.

Minor operational differences will not necessarily prevent TUPE applying, but a fundamental change to the activities may do so.

This is a question of fact and degree rather than something that can be decided solely from the wording of the commercial contract.

When might TUPE not apply?

There are several situations where employers should investigate carefully rather than assuming there is a transfer.

A pure share sale will not ordinarily involve a change of employer.

A service provision change may also fall outside TUPE where the activities are for a single specific event or task of short-term duration, or consist wholly or mainly of supplying goods for the client’s use.

Other cases are less clear-cut. TUPE may not apply where:

• there is no qualifying economic entity;
• no relevant organised grouping existed before a service change;
• the activities performed afterwards are fundamentally different;
• the employee population was not genuinely organised around the relevant client or activity; or
• work is fragmented so substantially between several incoming providers that the required transfer test is not satisfied.

Fragmentation is particularly fact-sensitive.

Splitting one contract between several providers does not automatically prevent TUPE applying, but the division of the activities can affect both whether there is a transfer and where individual employees may fall.

Which employees transfer?

Establishing that TUPE applies is only the first stage. Employers must then identify the employees who fall within the transferring business or organised grouping.

Assignment is not determined by job title alone.

Relevant evidence can include what the employee actually does, how the work is organised, which clients or activities they support, management responsibility and the proportion of their working time connected with the transferring activity.

But there is no automatic 50% test or other fixed percentage that decides assignment.

For service provision changes, employers should also distinguish between someone who happens to work frequently on a contract and someone who forms part of an organised grouping created to provide that service.

This is why agreeing a list of names commercially between the outgoing and incoming employers cannot itself decide who transfers. The legal position follows the facts.

Does TUPE apply to small businesses?

Yes. The size of the business does not determine whether TUPE applies.

A transfer can involve a large workforce or potentially only one employee.

Business size can, however, affect how the information and consultation process is conducted.

For transfers taking place on or after 1 July 2024, an employer without existing appropriate representatives can inform and consult affected employees directly where either the employer has fewer than 50 employees or fewer than 10 employees are transferring.

Otherwise, where there are no existing representatives, an election may be required.

This is a procedural simplification. It does not create an exemption from TUPE for small employers.

What if an employee objects to transfer?

An employee does not have to accept a transfer.

If an employee validly objects to transferring, their employment will normally end when the transfer takes place.

The termination arising from the objection is not generally treated as a dismissal, so the employee will not usually become entitled to redundancy pay or an ordinary unfair dismissal claim simply because they objected.

Different issues can arise where the transfer would result in a substantial detrimental change in working conditions.

Employers should therefore avoid treating every objection as a routine resignation without first understanding why the employee is objecting.

TUPE and redundancy

TUPE does not prevent every redundancy.

It does, however, give employees additional protection where dismissal is connected with the transfer.

A transfer-related dismissal can potentially be fair where there is an economic, technical or organisational reason involving changes in the workforce and the normal requirements of a fair redundancy process are also satisfied.

Employers should therefore keep the two issues separate: first establish the TUPE position; then analyse whether there is a genuine redundancy situation and what process is required.

Our guide to the redundancy process for employers explains the wider redundancy stages, while the redundancy consultation guide deals with consultation in more detail. Businesses dealing with a significant change programme can also obtain redundancy and restructuring support.

Where collective redundancies are proposed, additional rules may apply.

As at 9 September 2026, the existing statutory trigger based on 20 or more proposed redundancies at one establishment remains relevant.

The Employment Rights Act 2025 has enacted a future organisation-wide threshold as well, but this additional threshold is expected to take effect in 2027 and its operative threshold is to be set through secondary legislation.

It should not yet be treated as current law.

Can terms be changed after TUPE?

Employers should not assume that transferred employees can simply be moved onto the incoming employer’s standard contracts.

Where the sole or principal reason for a contractual change is the transfer itself, TUPE places restrictions on the change.

Certain variations may be possible, including where there is an economic, technical or organisational reason involving a change in the workforce and the employee agrees, or in other circumstances permitted by the regulations.

Positive changes agreed with employees can also be made.

Employers contemplating changing an employee’s contract following a transfer should therefore identify the genuine reason for the change before beginning a harmonisation exercise.

What should employers do if TUPE may apply?

The best time to determine the TUPE position is before commercial arrangements are implemented.

Harrington Raine recommends that employers:

1. Define the proposed change. Establish precisely what business, service or activity is moving.
2. Identify the legal employers and client. Map who employs the workforce before and after the proposed change.
3. Compare the activities. For service changes, examine what is actually done before the change and what will be done afterwards.
4. Map the workforce. Identify employees connected with the business or activities and how the work is organised.
5. Test assignment carefully. Avoid arbitrary percentages or selecting employees simply because the parties would prefer them to transfer.
6. Exchange information early. The transferor must provide prescribed employee liability information to the transferee at least 28 days before the transfer, although earlier commercial due diligence will usually be sensible.
7. Plan information and consultation. There is no single statutory minimum TUPE consultation period. Employers need enough time to comply properly before the transfer and should start as early as reasonably possible.
8. Separate TUPE from any restructure or redundancy analysis.
9. Avoid definitive employee communications until the position has been properly assessed.

Where the facts remain uncertain, TUPE support for employers can help establish the likely position before the transfer timetable becomes difficult to change.

Common TUPE mistakes

One of the most common mistakes is starting with the commercial contract instead of the underlying facts.

A clause saying that TUPE “does not apply” cannot contract employees out of statutory protection if TUPE applies as a matter of law.

Equally, stating that TUPE applies does not necessarily make every nominated employee transfer.

Other common problems include:

• leaving the analysis until immediately before completion;
• assuming every contractor change is automatically caught;
• using a fixed percentage to identify employees;
• overlooking fragmented services;
• failing to coordinate information between the transferor and transferee;
• treating post-transfer harmonisation as routine;
• assuming all employees working on a contract must transfer; and
• confusing TUPE with redundancy.

Employers should also distinguish mandatory TUPE information from broader commercial due diligence.

The statutory employee liability information has a prescribed purpose and timetable, but it is rarely enough by itself for the incoming employer to understand all operational and employment risks associated with the transaction.

Current reform position – September 2026

The core TUPE tests described in this guide remain in force.

There are, however, wider employment law changes that employers should keep under review.

The Employment Rights Act 2025 extends the time limit for specified TUPE tribunal complaints from three months to six months. The wider employment tribunal time-limit reforms are due to apply from 1 October 2026, so they are enacted but not yet in force on the date this resource was reviewed.

Separately, the Government launched a Make Work Pay TUPE call for evidence in April 2026 to inform possible future reforms intended to strengthen TUPE.

That exercise concerns future policy development rather than current law and does not alter the tests employers should apply today.

Frequently asked questions

Does TUPE apply to a share sale?

Normally not simply because shares change hands.

The company remains the same legal employer. TUPE may still become relevant if the transaction involves a separate transfer of a business, undertaking or services between legal employers.

Can TUPE apply without physical assets transferring?

Yes.

The absence of premises, equipment or other physical assets does not by itself prevent TUPE applying.

The importance of different factors depends on the nature of the business or activity being transferred.

Can TUPE apply to one employee?

Potentially.

Neither business size nor a minimum number of employees determines whether TUPE applies, and an organised grouping for a service provision change can potentially contain one employee.

What happens if a service is split between several new providers?

TUPE may still apply, but the analysis becomes more complex.

Employers need to consider which activities continue with each provider, whether they remain fundamentally the same and whether fragmentation has changed the nature of the service sufficiently to affect the transfer analysis.

Does every employee working on a client account transfer?

No.

Employers need to analyse whether the employee is assigned to the transferring business or organised grouping.

Time spent on the account can be relevant evidence, but it is not an automatic percentage test.

When should TUPE planning begin?

As soon as a business transfer, outsourcing, insourcing or contractor change becomes a realistic proposal.

Waiting until the commercial terms have been agreed can leave too little time to resolve employee assignment, exchange information or carry out meaningful consultation.

For further practical employer guidance, see our HR & Employment Law resources.