Transfer of undertakings (TUPE)
This factsheet was last updated January 2015.
What is a transfer of an undertaking?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) protect UK employees when a business changes to a new owner. TUPE regulations apply to what are known as ‘relevant transfers’ which may occur in many situations. The two broad categories are business transfers and service provision changes.
TUPE regulations apply to a business transfer if there is a transfer of an economic entity that retains its identity (known as a stable economic entity). This can be determined by asking:
- 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)?
- Are there intangible assets (such as such as patents, trademarks, copyright, goodwill or brand recognition) transferred at the time of the transfer?
- Have the majority of employees been taken over?
- Have the customers been transferred?
- Is there a high degree of similarity between the activities carried on before and after the transfer?
If the answer to several of the above questions is 'yes', then TUPE regulations are likely to apply. In some cases only one of those factors has been enough.
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).
The activities undertaken must also be essentially the same after the transfer as they were before it.
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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- What is a transfer an undertaking?
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