TUPE or not TUPE? When does TUPE not apply?

What are the key things to consider?

Liability and key requirements

• Liability for the outgoing employers’ acts and omissions with regards to the transferring employees is passed across under TUPE to the incoming employer, so make sure both parties are clear on what this means…
• The incoming employer (transferee) is required to give the outgoing employer details of any measures they envisage in relation to the transferring employees, to enable the outgoing employer to comply with their information and consultation obligations (see below).

Collective agreements/union recognition

• The incoming employer (transferee) takes over any collective agreements for transferring employees and which were in force at the point of transfer, otherwise known as the ‘static approach.’ This means the terms and conditions of employment negotiated through collective bargaining as well as wider employment relations arrangements such as information and consultation frameworks, agreed before the transfer. If you’re not a party to any negotiated changes after the transfer, you’re not bound by them.
• Union recognition transfers ONLY where the business keeps its identity and isn’t merged into the incoming employers’ organisation BUT to maintain good employee relations, before the transfer, the incoming employer should consider discussing the ongoing collective representation arrangements for transferring employees with the relevant Trade Union reps.

📌 Case Example: Alemo-Herron v Parkwood Leisure Ltd (2013)

• Employees from Lewisham Council had contracts guaranteeing pay rises under a national collective agreement (NJC).
• After transferring to Parkwood Leisure Ltd, the new employer refused to honour pay increases negotiated after the transfer.
• The European Court of Justice ruled that TUPE protects existing contract terms, but new employers do not have to honour future agreements they were not part of.

Staff representatives/consultation

• The relevant employer must inform employee representatives/TU Reps of the employees affected by the transfer of the fact and proposed date of the transfer; the reasons for it; the legal, economic and social implications of the transfer for the affected employees; whether there will be any ‘measures’ made in connection to the transfer or not, and if so what they are. Details with regards to agency workers must also be given i.e. numbers, function they are in, the type of work they are undertaking. Informing is different to consultation as there is no need to debate or agree any points.
• Formal consultation is required if the incoming or outgoing employer envisages ‘measures’ in relation to their respective employees. These aren’t defined in TUPE regulations however normally include actions, arrangements or steps that will have an effect on transferring employees e.g. moving from weekly to monthly pay or vice versa, redundancies, workplace relocation, different working patterns etc.
• Meaningful consultation must be carried out with the intention of seeking the agreement of the employee representatives to the intended measures, and the relevant employer should consider and reply to any representations made, and if rejecting any, must state the reason why this is the case.
• If you are a micro-business (with fewer than 50 employees OR with less than 10 employees transferring) and have no existing appropriate representatives, no recognised unions and have not already invited the employees to elect representatives, you can inform and consult with the employees directly.

Dismissals and ETO reasons for dismissal

• If an employee is dismissed because of the transfer itself, the dismissal is ‘automatically unfair’. However, dismissals can be fair if the reason for the dismissal is an ETO ‘Economic, Technical or Organisational reason entailing changes in the workplace,’ are evidenced as genuine redundancy situation and the employer follows a fair dismissal procedure.
• To bring an unfair dismissal claim based on the transfer the employee must still meet the qualifying service requirement i.e. 2 years continuous service

Redundancies

• If you are the incoming employer and want to implement redundancies after the transfer i.e. because you have your own employees carrying out functions involved in the transferring business or service, and are proposing to make 20 or more redundancies at one establishment within a period of 90 days or less, collective redundancy consultation obligations arise alongside TUPE obligations.
• You can (start to) consult with the transferring employees about potential redundancies where there is or is likely to be a relevant transfer, provided the outgoing employer agrees but you cannot confirm any redundancies prior to the transfer.

Contractual changes

• Contrary to popular belief, changes to terms and conditions can be made during TUPE. However, they’ll only be valid if there is an ETO reason and provided the employer and employee agree the change.
• An ETO reason (see above) can’t be used just to cut costs or harmonise terms and conditions between existing and new employees. This is a complex area – seek legal advice before action is taken, because ultimately the courts may end up deciding if the change was fair or not, which could prove expensive!
• Changes can be made after the transfer occurs if it is not connected to the TUPE, and the terms of the contract would have allowed the employer to make the change anyway, and/or if a new development arises i.e. the new employer wins an order from a new client and has to bring in change to meet their needs. Full consultation will be required.
• Terms and conditions agreed in a collective agreement can be renegotiated one year after the transfer as long as the overall change is no less favourable to the employees involved.

📌 Case Example: Tapere v South London and Maudsley NHS Trust (2009)

• After Ms. Tapere’s role was transferred, she was told to relocate.
• Her contract contained a mobility clause, but it only applied to locations of the original employer.
• The Employment Tribunal ruled that the new employer could not enforce the mobility clause, leading to constructive dismissal.

Lesson: If a transfer changes work location, check whether existing mobility clauses apply—otherwise, it could be breach of contract.

Information provision

• The outgoing employer must provide ‘Employee liability Information’ (ELI) about transferring employees to the incoming employer (normally in writing or in computer data files) not less than 28 days before the relevant transfer. This must include the identities of the transferring employees; their ages; their employment particulars i.e. terms and conditions; any active/live disciplinary and grievance records from the last 2 years; any collective agreements in force and finally, any outstanding claims they may have against the outgoing employer i.e. tribunal, personal injury claim etc.
• As well as ELI, incoming employers often want additional information when considering a transfer. This is known as ‘Due Diligence.’ It only applies where there is a commercial contract between the two parties, because it forms the basis of warranties and indemnities in the commercial agreement concerning the TUPE transfer.
• ELI and Due Diligence should be considered as part of the same process, where it’s agreed they both apply, and run together.

📌 Case Example: Clark v Middleton and Another (2010)

• The employer failed to inform an employee who their new employer would be following a TUPE transfer.
• The tribunal ruled that this was a serious breach, not a minor mistake.

Lesson: Employers must clearly inform staff about who their new employer is—failure to do so can lead to legal claims.

Refusal to transfer

• You may have an employee tell you (as their outgoing employer) that they refuse to transfer to the new employer. If they wish to resign before the transfer they should submit this in writing along with their objection to the transfer of their employment.
• This will mean they don’t transfer and their employment will cease at the point of TUPE transfer. They would normally need to work and be paid for their notice period; will lose any continuity of employment under their current contract and any associated accrued rights; won’t be entitled to any additional payments such as a redundancy payment where ETO redundancies are being made; but will be entitled to any outstanding wages owed and payment for any accrued but untaken annual leave at employment end date.
• In these situations, where the resignation is not a valid constructive dismissal, the employee will not be entitled to claim unfair dismissal.

📌 Case Example: London United Busways Ltd v De Marchi & Abellio London Ltd [2024]

• The employee was a bus driver who objected to the transfer, stating that it would increase his commuting time significantly, making it unmanageable.
• His original employer treated his refusal as a resignation, meaning he was not entitled to redundancy pay or any dismissal rights.
• The EAT ruled that employees who object to a TUPE transfer due to a substantial and detrimental change in their working conditions may be entitled to claim unfair dismissal. The original employer should not have simply treated his objection as a resignation.

Lesson: Instead, they should have considered whether the change in working conditions was substantial enough to justify an unfair dismissal claim.

As we have said above, if you have a potential TUPE situation then please do get in touch with us for pragmatic, no-nonsense support. No onerous or long-term contract is required as we have a pay-as-you-go option which can be very quickly set up so there is no delay in us giving you the support you need.

It’s never too late to manage a difficult employee or situation, call us for advice!

Other support from Jaluch:

• Election and training of staff/employee representatives for the purposes of TUPE
• Chairing consultation meetings
• Hearing and investigating grievances
• Tribunal Claim responses and settlement negotiations
• TUPE training for managers, HR or supervisors.