Transfer of undertakings (TUPE)
Resource summary
This factsheet was last updated in June 2011.
What is a transfer of an undertaking?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 apply to what are known as ‘relevant transfers’ which may occur in a wide range of situations. The two broad categories are business transfers and service provisions changes. Some transfers will be both a business transfer and a service provision change.
Business transfers
The key question is whether there is a transfer of an economic entity that retains its identity. To decide if there is a stable economic entity that is capable of being transferred, the factors to consider include:
- Is the type of business being conducted by the transferee (incoming business) the same as the transferor's (outgoing business)?
- Has there been a transfer of tangible assets such as building and moveable property (although this is not essential)?
- What is the value of the intangible assets at the time of the transfer?
- Have the majority of employees been taken over by the new employer?
- Have the customers been transferred?
- What is the degree of similarity of the activities carried on before and after?
If the answer to all (or in some cases several of) the above questions is 'yes', it is safe to assume that there has been a transfer of a stable economic entity.
Service provision changes
A ‘service provision change’ occurs when a client who engages a contractor to do work on its behalf is either:
- reassigning such a contract (whether by contracting out, outsourcing or re-tendering), or
- bringing the work ‘in-house’ (where a contract ends with the service being performed in-house by the client themselves).
It will not be a service provision change if:
- the contract is wholly or mainly for the supply of goods for the client’s use, or
- the activities are carried out in connection with a single specific event or a task of short-term duration.
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