Guide to TUPE
Disclaimer
Whilst every effort has been made to ensure the accuracy of this factsheet, it is a
summary, rather than a definitive statement of the law; advice should be taken before
action is implemented or refrained from in specific cases. No responsibility can be
accepted for action taken or refrained from solely by reference to the contents of this
factsheet.
This guidance is for use by UKHCA members only and should not be circulated
outside of UKHCA members or reproduced in any form.
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Introduction
[Colin, I am assuming that in the usual way you will want to write your own
introduction here.]
1. What is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment)
Regulations 2006 (“the 2006 Regulations”) and extend to England, Wales, Scotland
and Northern Ireland except where otherwise provided. There are some further
Regulations which apply specifically to Northern Ireland (The Service Provision
Change (Protection of Employment) Regulations (Northern Ireland) 2006).
The purpose of TUPE is to protect employees if the business or service, in which
they are employed, changes hands. The effect of TUPE is to move employees, and
any liabilities associated with them, from the old employer to the new employer by
operation of law.
2. When will TUPE apply?
TUPE applies in a variety of situations and will apply no matter how big or small the
organisation is and regardless of the number of employees involved. A “relevant
transfer” can take place in a number of ways, these can be grouped into two
categories and include:
Business transfers
Service provision change
When all or part of a business is sold Where the provision of a service is
as a going concern.
brought back in house, for example,
where the Local Authority decides to
deliver a service, previously delivered
by a private provider, themselves.
Where an “undertaking” (which
includes premises, assets, fixtures
and fittings, good will, as well as
employees and other things) that is
situated in the UK transfers to another
person/organisation and retains its
identity after the transfer.
Where services are outsourced to a
contractor, for example, where the
Local Authority decides to outsource
a service, previously delivered by
them in house.
There must be what is referred to as
a transfer of an “economic entity”
which is defined as “an organised
grouping of resources which has the
objective of pursuing an economic
activity, whether or not that activity is
central or ancillary.”
Where a provider loses a contract
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and another provider is appointed,
(whether this is through a tendering
process or not).
Some transfers will be both a business transfer and a service provision change. As
long as it falls in to at least one of the categories, TUPE will apply. Service provision
changes are relatively easier to identify.
What do providers need to look at when deciding if a business transfer has
occurred?
Providers must consider the following:
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the type of business or undertaking that is transferred;
if there is a transfer of any tangible assets (buildings, vehicles, equipment,
stocks etc);
if there is a transfer of any intangible assets (goodwill, copyrights, trademarks,
trade names etc);
the value of any intangible assets at the date of the transfer;
whether the majority of the employees are taken over by the new employer
(including the employees themselves or the main employees in terms of the
skill set required);
if any customers are transferring;
how similar the activities are that are being carried out before and after the
transfer
the extent of any disruption to those activities; and
If there is any break in the carrying out of the activities.
What do providers need to look at when determining if a service provision
change has occurred?
The most common “relevant transfer” that homecare providers will come across is
where there is a service provision change. Put simply a service provision change
occurs when a client (for example a local authority) either:

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Outsources a service to a provider;
Brings a service back in house from a provider; or
Terminates a contract with a provider and awards the contract to an
alternative provider.
Where there is a service provision change TUPE will only apply if the provider who is
due to carry out the activities after the transfer (the new provider), carries out
activities that are fundamentally the same as those carried out by the provider who
carried out the activities before the service provision change (the old provider).
For example, where there is a significant change such as a move from registered
care to supported living, or alternatively where there is a significant reduction in the
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amount of support needed, TUPE may not apply.
Will there be a business transfer or a service provision change when a user
takes a direct payment?
If the person already has an individual If
the
service
(activity)
remains
budget which they manage themselves fundamentally the same then TUPE is
and changes providers.
likely to apply in principle (an example of
when TUPE would not apply is where
there is a significant change, such as a
significant reduction in the amount of
support provided).
The next consideration, if the services
remain fundamentally the same, is
whether there is a group of people
organised around and assigned to that
person/service? If so then TUPE is likely
to apply.
If the person has not already got an If support is provided via a contract with
individual budget and receives this for the the Local Authority, the contract ends
first time.
and the user gets an individual budget
and
commissions
the
service
themselves, the application of TUPE is
not as clear cut as the above.
This is because the client is changing,
from the Local Authority to the individual
user, and therefore there is no service
provision change TUPE transfer as
above.
However, TUPE may still apply if there is
a transfer of “an economic entity” which
“retains its identity” following the transfer
(therefore
“there
is
a
business
transfer”). There is case law that states
that the economic entity might be just the
staff that is subject to a transfer and
therefore even in a move from a Local
Authority contract to a personal budget it
is possible that TUPE may apply.
This is not straight forward and would
need careful consideration in light of the
facts of each situation.
If the person wants to employ the staff Either of above could apply. If, there was
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directly.
no service provision change, then it could
still be argued that there is a transfer of a
stable economic entity and therefore
TUPE may well apply that way.
3. Who will transfer?
Briefly, the employees who will transfer are those who immediately before any
transfer are “assigned” to the organisation (or part transferring). Where there is a
service provision change (as explained above) the employees will transfer to the new
contract provider providing they are part of an organised group of employees whose
principal purpose is to deliver the contract (or part of it) which is now to be provided
by the new contract provider. This confines TUPE to the situation where there is a
team of employees that are essentially dedicated to carrying out the activities that are
due to transfer. It is important to note however that a single employee can form “an
organised grouping”.
What does this mean in practice?
It may well be fairly clear whether staff will transfer or not. However, where there is
doubt (perhaps because staff work partly on the contract transferring and partly on a
retained contract), then all the circumstances will be looked at to determine if staff
transfer including:
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the amount of time the employee spends on one part of the operation or the
other – this could be looked at as a percentage of their time. There is no
specific percentage of time which an employee must devote to carrying out
particular activities before being regarded as assigned but anything at 51% or
over would be arguable (the higher the percentage the stronger the
argument);
the amount of value given to each part by the employee (for example if they
are integral to one service but have a minor role in another);
the terms of the contract and the job description showing what the employee
could be required to do; and
how the cost to the employer of the employee’s services had been allocated
between the different parts of the operation.
To constitute an organised grouping it will not be enough however that the
employees carry out the majority of their work for a particular client. Instead
employees must be organised by reference to the requirements of the client and be
identifiable as a member of that client’s team. If the employees provide their services
to a number of different clients, this requirement might not be met and TUPE
therefore may not apply.
What are the rights of those with zero hour contracts?
The definition of an “employee” for the purposes of TUPE is wider than the usual
definition. An employee is defined as “any individual who works for another person,
whether under a contract of service or apprenticeship or otherwise but does not
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include anyone who provides services under a contract for services.” Therefore,
workers or employees who are retained on zero hour contracts could be considered
to be “employed” depending on the circumstances.
If they fall within the above definition, it will need to be considered as to whether they
are assigned to the organised grouping of employees and whether they were
employed immediately before the transfer. The fact that the individuals are casual
workers may mean that they are not actually employed at this time.
In the case of Pulse Healthcare Ltd v Carewatch Care Services Ltd & Ors [2012]
UKEAT 0123/12, the claimants were engaged as care workers on zero hours
contracts which stated that “the employer is not under an obligation to offer the
employee any work and has specifically reserved the right to reduce the employee’s
working hours whenever necessary”. Following a TUPE transfer, another care
provider, the new employer, argued that this meant the claimants were not
employees because there was no mutuality of obligation.
The Employment Appeals Tribunal concluded that the zero hours agreement did not
reflect the reality of the relationship. The claimants were employed as part of an
established team to deliver a care package for a specific individual for an agreed
number of hours each week. They had all worked significant hours on a regular basis
over a number of years. This meant that they were employed on global contracts of
employment, even though they could query particular shifts when a new roster was
produced. They were employees and entitled to transfer to the new care provider.
What if the employee does not want to transfer?
If the employee does not want to transfer they would need to object to the transfer (to
prevent them from automatically transferring). Objecting to the transfer will
automatically bring the employee’s employment to an end without a notice period
there will be no transfer to the new provider and the employment with the old provider
will be treated as terminated with effect from the transfer date. Employees who object
to the transfer are not entitled to any statutory or contractual compensation on
termination.
Where the employee objects to the transfer, and therefore does not transfer to the
new provider, the old provider is however entitled to offer the employee another
position within their business and retain the employee in their employment.
4. What is the effect of TUPE on the new provider?
TUPE ensures that the contracts of employment of staff do not terminate but are
preserved. The employees affected by the transfer will automatically become
employees of the new provider on the same terms and conditions (except for certain
occupational pension rights). It will be as if their original contracts of employment
with the old provider had been made with the new provider in the first place. Any
claims against the old provider will transfer to the new provider and any contractual
rights they were entitled to with the old provider (with the exception of some
occupational pension rights) will transfer too.
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What if the new provider doesn’t want to take on all employees?
The eligible employees transfer automatically and TUPE ensures that the contracts
of employment of staff do not terminate but are preserved. The new provider
therefore cannot refuse to take on employees to whom TUPE applies and any
dismissal of the transferring employees will be automatically unfair if the dismissal is
by reason of the transfer or a reason connected with the transfer, unless there is no
“economic, technical or organisational“ reason to dismiss (“ETO reason”).
While there is no statutory definition of the ETO reason, it has been held that it must
be concerned with the day-to-day running of the business. The Department for
Business, Innovation and Skills guidance states that an “economic, technical or
organisational” reason is likely to include:
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a reason relating to the profitability or market performance of the transferee's
business (i.e. an economic reason);
a reason relating to the nature of the equipment or production processes
which the transferee operates (i.e. a technical reason); or
a reason relating to the management or organisational structure of the
transferee's business (i.e. an organisational reason)."
The ETO must also entail changes in the workforce. There is no statutory definition of
"entailing changes in the workforce", but the courts have restricted it to mean
changes in the numbers employed (i.e. redundancies) or the functions performed by
employees (i.e. change of roles).
What if the new provider does not want to (cannot afford to) take employees on
their existing terms and conditions of employment?
Following a transfer, employers often find they have employees with different terms
and conditions working alongside each other. It is common for new providers to want
to assimilate transferring employees into their existing human resources policies and
structures and/or harmonise the terms of employment especially if the transferring
employees are on better terms than their existing staff.
Although there are potential difficulties in having a workforce where staff members
are working to different terms and conditions, TUPE protects against harmonisation
or changes taking place if the sole or principal reason for the variation is the transfer.
Any such changes will be void.
The current guidance by the Department for Business Innovation and Skills
addresses when the sole or principal reason for a change will be the transfer. It
states that:
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Where an employer changes terms simply because of the transfer and there
are no extenuating circumstances linked to the reason for that decision, the
reason for the change is the transfer.
Where there are some extenuating circumstances, then whether the sole or
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
principal reason for the change is the transfer is likely to depend on the
circumstances.
Where the employer wishes merely to harmonise the terms and conditions of
transferred staff with those of existing staff, the transfer will be the reason for
this change.
If the sole or principal reason for the variation is not the transfer (i.e. where the
change is unrelated to the transfer), changes to the terms and conditions of
employment are permitted.
There is no specific period after which it is safe to say that the connection with the
TUPE transfer has been broken, as the test is whether the sole or principal reason
for the change is the transfer.
For example, in Smith and others v Trustees Of Brooklands College UKEAT/0128/11
a variation was held not to be by reason of the transfer or for a reason connected
with the transfer. The employees were part-time teaching assistants, but were paid
full-time rates. The new provider sought to reduce their rates of pay because the HR
Director believed that the existing rates were a "mistake" (the employees were paid
full time pay despite working part time only), in that they were not reflected anywhere
else in the sector, and were contrary to the guidelines set out by the employees'
trade union. The EAT upheld the tribunal's decision that this was not a reason
connected with the transfer.
It is worth noting that even if it is unrelated, changes will either need to be agreed or
implemented by way of termination of one contract and reengagement on new terms.
Contractual variation to the terms and conditions of employment will be also
permitted if:

The sole or principal reason for the variation is an economic, technical or
organisational reason entailing changes in the workforce (“ETO reason”)
provided that the employer and employee agree that variation.
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The terms of the contract permit the employer to make such a variation.
A change for an ETO reason could involve a functional change for an employee who
held a managerial position to enter into a non-managerial role on new terms and
conditions of employment.
5. Once TUPE is established, what are the obligations on the providers?
Is there an obligation to provide information about the transferring employees?
TUPE requires the old provider to supply the new provider with certain information
about the transferring employees in writing not less than 28 days before the transfer.
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Further, the old provider must update the new provider if any of this information
changes before the transfer.
The following information in relation to any employees who will transfer (or who
would have transferred unless they were dismissed for a reason relating to the
transfer) must be provided:
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The name and age of the employee;
All the written particulars of employment that an employer is obliged to give on
commencement of employment (these should all be contained in the
employees contract of employment or statement of terms if they are legally
compliant);
Information on any disciplinary or grievance procedure in relation to the
employee which could result in a claim;
Information on any court or tribunal claim that has been brought against the
transferor in the last two years or which the old employer has reasonable
grounds for believing will be brought; and
Information on any collective agreement which will apply after the transfer.
All personnel files should be handed over to the new provider on the transfer date.
It may be the case that the Local Authority who is considering tendering for work
seeks to obtain anonymised employee liability information from the old provider
before the tender process begins. On the basis that the information will all be
anonymised, the outgoing provider may well want to comply with this request
although it is not required to do so under TUPE until 28 days before the transfer.
Some Local Authorities however make a contractual requirement for the information
to be supplied to them on request, and the refusal to do so in the circumstances,
would constitute a breach of contract.
What should the new provider be doing with the received employee
information?
The new provider needs to ensure that it is aware of exactly what it is inheriting. This
will involve considering what rights, powers, duties, risks and liabilities will be
transferring with the staff. The new service provider will also inherit liability for any
staff who have been dismissed by the outgoing provider for a reason relating to the
transfer.
For example, the transferring employees may have contractual right to additional sick
pay or the transferring staff may be part way through an equal pay claim or a
disciplinary procedure which carries a risk of an Employment Tribunal claim. Finance
liabilities which may be incurred as a result of the same would need to be taken into
consideration before agreeing to the transfer.
On receiving and reviewing the employee information, the new provider has an
obligation to provide to the old provider the information about any “measures” that it
envisages it will take in relation to the transferring employees in connection with the
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transfer or, if it envisages taking no measures, confirm that fact. As a general rule,
the word "measures" is given a wide interpretation and includes a positive act or
omission by the employer. The term "measures" has been held to have the "widest
scope", covering any "action, step or arrangement" taken in connection with the
transfer.
This information must be provided in time to allow the old provider to perform its
obligation to give the relevant information to the union/employee representatives (see
below).
What can the new provider do if the old provider does not provide the required
information?
If the old provider does not provide the relevant employee information, or provides it
after the deadline, or provides inaccurate information, the new provider can bring a
claim in the Employment Tribunal within 3 months of the date of transfer. If their
claim is successful, the Employment Tribunal can order that the old provider pays the
new provider an amount that the Employment Tribunal considers to be ‘just and
equitable’. There is a minimum payment of £500 per employee in respect of whom
the information was not provided or was defective (unless the Employment Tribunal
considers that it would be unjust or inequitable to award this minimum payment).
What obligations do the providers have towards the employees?
Both the old and the new provider need to inform and consult (where appropriate)
with their staff who will be affected by the transfer.
Old provider:
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any staff who may transfer; or/and
any other staff who will be affected
by the transferring staff leaving the
business.
New provider:
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any of its existing staff who will be
affected by the transferring staff
coming on board.
Providers have a duty to inform and, where appropriate, consult with the
representatives of the independent recognised trade unions (if any) or the employee
representatives of the relevant employees regarding the proposed transfer. If there
are no employee representatives, then the affected employees must be given the
opportunity to elect representatives and TUPE sets down the process by which such
representatives should be elected.
Duty to inform - TUPE provides that the
following information must be given:
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The fact of the transfer – the date
(or proposed date) when it is to
take place and the reasons for it.
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The legal, economic and social
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implications of the transfer for the
affected employees – what is
meant by "legal, economic and
social implications" will be a
question of fact in each case.

The measures which the employer
envisages it will take in connection
with the transfer in relation to "any
affected employees" or, if no
measures are to be taken, that
fact.
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The old provider must also provide
information about any measures
that the new provider envisages it
will take in relation to the
transferring employees in
connection with the transfer or, if
the transferee envisages taking no
measures, that fact.
Duty to consult - TUPE provides that The duty to consult only applies if an
the provider must consult if it will take employer of the affected employees
measures in relation to an affected "envisages that he will take measures in
employee:
relation to an affected employee, in
connection with the relevant transfer”.
Where this is the case, the provider shall
consult the appropriate representatives of
that employee with a view to seeking
agreement to the intended measures".
What happens if there is a failure to inform or consult properly?
Claims could be brought by all affected staff in the Employment Tribunal who have
not been properly informed and, where appropriate, consulted about the transfer.
Where there is a failure to inform and/or consult the Tribunal could award up to 13
weeks’ pay per employee.
It is important to note that if the Tribunal upholds a claim against the old provider,
although it may order that employer to pay appropriate compensation to the affected
employees, it could also order the new provider to pay the compensation. This is if
the old employer establishes that its breach of the requirements results from the new
employer’s failure to supply it with details of any proposed measures in accordance
with its obligations.
Further information and guidance
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Acas offers a range of advice and support for businesses and individuals facing
TUPE free of charge. You can download their TUPE guidance available on:
http://www.acas.org.uk/index.aspx?articleid=1655.
This guide has been prepared by Anthony Collins Solicitors LLP. If you would like
more information about TUPE or require specific advice or guidance, please contact
Anna Dabek on 0121 212 7494 or email anna.dabek@anthonycollins.com.
Anthony Collins Solicitors are UKHCA’s recommended solicitors and have provided
legal advice and services to member organisations for more than 10 years. They
operate a legal helpline for UKHCA members giving a limited amount of free
telephone advice and can supply estimates for more detailed advice. You will also be
able to benefit from the preferential rates offered to UKHCA members. For more, call
the UKHCA member helpline on 020 8661 8188.
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