Transfers – the basic legal rules

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) state that, when a business or part of a business is transferred from one employer to another, the employees doing the work should transfer on their existing terms and conditions. Service-provision changes are explicitly covered.

• To come within TUPE, there has to be a relevant transfer of an activity that amounts to a “stable economic entity”.

• The employer before the transfer is referred to as the “transferor”, and the employer to whom the business transfers is the “transferee”.

• Under TUPE, most legal liabilities (for example, wages owed) transfer to the transferee.

An employee covered by TUPE has the right to continued terms and conditions, but there are special rules regarding pensions. There is no rigid time limit after which TUPE protection no longer applies, but this does not mean that transferred employees’ terms and conditions can never change.