Transfer of undertakings (TUPE)
This factsheet was last updated October 2013.
What is a transfer of an undertaking?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) protect employees when a business changes to a new owner and apply to what are known as ‘relevant transfers’ which may occur in many situations. The two broad categories are business transfers and service provisions changes.
To determine if there is a TUPE transfer, the relevant definition asks if there is a transfer of an economic entity that retains its Identity. 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?
- 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 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).
In changes due to take place in January 2014, the activities undertaken must also be essentially the same after the transfer.
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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