A practical introduction to TUPE A practical introduction to TUPE

A practical introduction to TUPE
31 May 2015

In last December’s Purely Payroll, we looked at TUPE and immigration. In this issue, Anne-Marie Balfour gives a general introduction to TUPE to help HR professionals spot the issues as and when they occur

TUPE has been in force for over 30 years, impacting upon many employers and employees every day. Yet new decisions by the courts and tribunals are still giving us regular insights into how it should be interpreted in practical situations.

Employers with headquarters outside the EU sometimes cannot hide their disbelief: “go back and check the law, you must have got it wrong” or “what kind of law says I have to employ somebody else’s employees on somebody else’s terms?”

Some businesses will deal with TUPE week in week out and become expert at this. For many, however, TUPE raises its head infrequently. When it does, it is likely to be a very busy time for the business, when there are many other things to think about. Whilst specialist advice is likely to be inevitable, here is some background and useful tips for a smooth transaction, intended for those with little 

When TUPE applies, it has three main effects:

• The contracts of employment of certain employees will automatically transfer from one employer to another on their existing terms. The new employer ‘steps into the shoes’ of the old employer.
• Changes to terms and conditions of employees will usually be void, if the sole or principal reason for the change is the transfer. There are some limited exceptions.
• Dismissals will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself.

When does TUPE apply?

The statutory language is not straightforward. In practical terms, a (nonexhaustive) rule of thumb is that TUPE alarm bells should ring and you should consider whether TUPE applies, every time your organisation is:

• Being bought or sold (in whole or in part)
• Buying or selling a business (or part of one)
• Outsourcing services
• Bringing outsourced services back ‘inhouse’
• Merging with another
• Providing services to another organisation, but losing the contract to provide those services
• Winning a contract to provide services that are currently provided by another.

If the transaction is a share sale only, TUPE will not usually apply. Check carefully, however, the employing entity of the employees who service the company being sold. If the employees are employed elsewhere, or if there are plans to restructure before or after the transfer, there may still be TUPE issues.

Whilst the concept of TUPE is reasonably simple, assessing whether it applies in some commercial situations can be perplexing. Sometimes it will be obvious and sometimes it will be impossible to reach a reliable definitive conclusion (without the matter coming before a judge).

TUPE was created to protect employees and the courts take a purposive approach. It can therefore be sensible to err on the side of caution and assume that TUPE applies. Once you have gathered the initial facts, it will usually be sensible to seek an expert legal opinion as to whether TUPE applies and what this means for the transaction.

What procedures are required under TUPE?

In summary the key statutory procedural steps are:

• 28 days before the transfer, the transferor must give the ‘Employee Liability
Information’ to the transferee (see box). • The transferee must advise the transferor of any ‘measures’ that it intends to take in relation to the affected employees.
‘Measures’ means any ‘action, step or arrangement’ and are interpreted widely.
• The transferor and the transferee must provide prescribed information to the elected representatives of their respective affected employees.

Furthermore, if any ‘measures’ are envisaged, the employee representatives must be consulted. In some circumstances, very small businesses are permitted to inform and consult with affected employees directly, rather than via elected representatives.

If there are to be redundancies, the usual redundancy procedures will apply

Employee Liability Information (summarised)


• The name and age of each employee assigned to the transferring business
• The particulars of employment for each employee, as required by s1 of the Employment Rights Act 1996
• Information about disciplinaries and grievances
• Information about tribunal claims
• Information about collective agreements.

At what point in a transaction should we consider TUPE?

It is sensible to consider whether TUPE applies (or is likely to apply) as early as possible in a transaction. If TUPE does apply, there are certain practical steps that need to be taken. TUPE considerations can also influence the main commercial terms of a transaction, including the purchase price.

Considering TUPE as early as possible will allow you to:

• Reduce the risk of disputes with employees and the other party to the transaction
• Motivate and engage key employees.
• Assess whether TUPE applies and take advice if necessary, before it is too late to influence the commercial terms.
• Decide how the employee issues will be dealt with. If the employment issues are dealt with up front, the transfer of the employees will occur much more smoothly.
• Take account of TUPE in the commercial documents, for example the heads of terms, asset purchase agreement or outsourcing agreement. It is common to include detailed provisions relating to TUPE and employees. It may also be possible to agree to apportion the liability for employees in a more balanced way, or in a way that is stacked in your favour, by comparison with the default position under TUPE.
• Comply with the statutory procedural steps, including holding elections for employee representatives, if necessary.

Leaving TUPE issues to the last minute can be fraught for HR and upsetting for the employees. It can leave the employer at risk of substantial claims and leave a business with little or no negotiating room to agree fair and commercially balanced TUPE provisions with the other party to the deal.

Better late than never

Even if TUPE appears on the radar when it is just too late in a transaction to comply in full, it is usually still well worth doing whatever can be done in the little time remaining to comply.

By Anne-Marie Balfour, senior associate Charles Russell Speechlys LLP

In last December’s Purely Payroll, we looked at TUPE and immigration. In this issue, Anne-Marie Balfour gives a general introduction to TUPE to help HR professionals spot the issues as and when they occur

TUPE has been in force for over 30 years, impacting upon many employers and employees every day. Yet new decisions by the courts and tribunals are still giving us regular insights into how it should be interpreted in practical situations.

Employers with headquarters outside the EU sometimes cannot hide their disbelief: “go back and check the law, you must have got it wrong” or “what kind of law says I have to employ somebody else’s employees on somebody else’s terms?”

Some businesses will deal with TUPE week in week out and become expert at this. For many, however, TUPE raises its head infrequently. When it does, it is likely to be a very busy time for the business, when there are many other things to think about. Whilst specialist advice is likely to be inevitable, here is some background and useful tips for a smooth transaction, intended for those with little 

When TUPE applies, it has three main effects:

• The contracts of employment of certain employees will automatically transfer from one employer to another on their existing terms. The new employer ‘steps into the shoes’ of the old employer.
• Changes to terms and conditions of employees will usually be void, if the sole or principal reason for the change is the transfer. There are some limited exceptions.
• Dismissals will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself.

When does TUPE apply?

The statutory language is not straightforward. In practical terms, a (nonexhaustive) rule of thumb is that TUPE alarm bells should ring and you should consider whether TUPE applies, every time your organisation is:

• Being bought or sold (in whole or in part)
• Buying or selling a business (or part of one)
• Outsourcing services
• Bringing outsourced services back ‘inhouse’
• Merging with another
• Providing services to another organisation, but losing the contract to provide those services
• Winning a contract to provide services that are currently provided by another.

If the transaction is a share sale only, TUPE will not usually apply. Check carefully, however, the employing entity of the employees who service the company being sold. If the employees are employed elsewhere, or if there are plans to restructure before or after the transfer, there may still be TUPE issues.

Whilst the concept of TUPE is reasonably simple, assessing whether it applies in some commercial situations can be perplexing. Sometimes it will be obvious and sometimes it will be impossible to reach a reliable definitive conclusion (without the matter coming before a judge).

TUPE was created to protect employees and the courts take a purposive approach. It can therefore be sensible to err on the side of caution and assume that TUPE applies. Once you have gathered the initial facts, it will usually be sensible to seek an expert legal opinion as to whether TUPE applies and what this means for the transaction.

What procedures are required under TUPE?

In summary the key statutory procedural steps are:

• 28 days before the transfer, the transferor must give the ‘Employee Liability
Information’ to the transferee (see box). • The transferee must advise the transferor of any ‘measures’ that it intends to take in relation to the affected employees.
‘Measures’ means any ‘action, step or arrangement’ and are interpreted widely.
• The transferor and the transferee must provide prescribed information to the elected representatives of their respective affected employees.

Furthermore, if any ‘measures’ are envisaged, the employee representatives must be consulted. In some circumstances, very small businesses are permitted to inform and consult with affected employees directly, rather than via elected representatives.

If there are to be redundancies, the usual redundancy procedures will apply

Employee Liability Information (summarised)


• The name and age of each employee assigned to the transferring business
• The particulars of employment for each employee, as required by s1 of the Employment Rights Act 1996
• Information about disciplinaries and grievances
• Information about tribunal claims
• Information about collective agreements.

At what point in a transaction should we consider TUPE?

It is sensible to consider whether TUPE applies (or is likely to apply) as early as possible in a transaction. If TUPE does apply, there are certain practical steps that need to be taken. TUPE considerations can also influence the main commercial terms of a transaction, including the purchase price.

Considering TUPE as early as possible will allow you to:

• Reduce the risk of disputes with employees and the other party to the transaction
• Motivate and engage key employees.
• Assess whether TUPE applies and take advice if necessary, before it is too late to influence the commercial terms.
• Decide how the employee issues will be dealt with. If the employment issues are dealt with up front, the transfer of the employees will occur much more smoothly.
• Take account of TUPE in the commercial documents, for example the heads of terms, asset purchase agreement or outsourcing agreement. It is common to include detailed provisions relating to TUPE and employees. It may also be possible to agree to apportion the liability for employees in a more balanced way, or in a way that is stacked in your favour, by comparison with the default position under TUPE.
• Comply with the statutory procedural steps, including holding elections for employee representatives, if necessary.

Leaving TUPE issues to the last minute can be fraught for HR and upsetting for the employees. It can leave the employer at risk of substantial claims and leave a business with little or no negotiating room to agree fair and commercially balanced TUPE provisions with the other party to the deal.

Better late than never

Even if TUPE appears on the radar when it is just too late in a transaction to comply in full, it is usually still well worth doing whatever can be done in the little time remaining to comply.

By Anne-Marie Balfour, senior associate Charles Russell Speechlys LLP