TUPE
Also known as: Transfer of Undertakings (Protection of Employment), TUPE regulations, Acquired Rights Directive
TUPE (Transfer of Undertakings, Protection of Employment Regulations) is UK legislation — and an EU-wide equivalent under the Acquired Rights Directive 2001/23/EC — that automatically transfers employees from one employer to another when a business or service changes hands. Employees keep their existing terms, continuous service, and protections; dismissals connected to the transfer are automatically unfair without ETO (economic, technical, organizational) justification.
TUPE exists to prevent employees from losing protections when their employer changes due to a sale, merger, outsourcing, or insourcing of services. Without it, every business sale could be used as a vehicle for mass dismissal at favorable terms. With it, employees carry their employment contract, accrued rights, and continuous service over to the new employer automatically. TUPE applies to business transfers (sale of a business or part of one) and service provision changes (outsourcing, insourcing, retendering).
When TUPE applies
- Business transfer — sale or transfer of a business (or part of one) that retains its identity
- Service provision change — outsourcing a service to a new provider, bringing it back in-house, or moving it from one provider to another
- Does not apply to share sales (employer remains the same legal entity)
- Does not apply to one-off short-term contracts
Key protections
- Automatic transfer — employees move to new employer on existing terms
- Continuous service preserved — tenure carries across, affecting notice/severance/holidays
- Protection from dismissal — dismissal connected to transfer is automatically unfair unless ETO
- Information and consultation — both old and new employer must inform/consult affected employees (or their representatives) about the transfer
- Pension rights — limited transfer protection; most occupational pension arrangements need separate continuation
Practical implications
Buyers in M&A transactions inherit employees with their existing terms — no opportunity to "reset" terms on the back of the deal. Pre-transfer due diligence on employment terms is essential; post-transfer harmonization of terms requires careful ETO justification. Service provision changes (e.g., switching cleaning contractors) commonly catch SMBs off-guard: the new contractor inherits the existing staff, often unexpectedly.
Frequently asked questions
- What is TUPE?
- UK and EU legislation (Acquired Rights Directive in EU countries) that automatically transfers employees from one employer to another when a business or service changes hands, preserving terms and rights.
- When does TUPE apply?
- Business transfers (sale or part-sale that retains business identity) and service provision changes (outsourcing, insourcing, retendering). Does not apply to share sales — the employer remains the same legal entity.
- Can I change employees' terms after TUPE transfer?
- Only with ETO (economic, technical, organizational) justification and proper consultation. Changes solely connected to the transfer itself are automatically unfair under UK TUPE.
- Does TUPE apply in Georgia?
- No direct equivalent in Georgian law. Georgian companies acquiring EU/UK operations inherit TUPE obligations on those operations regardless of Georgian parent jurisdiction.