TUPE Transfer

The Transfer of Undertakings (Protection of Employment) Regulations 2006 - universally shortened to TUPE - protect employees when the business they work in is sold, outsourced, or brought back in-house. Employees automatically transfer to the new employer on their existing terms, including continuous service date, salary, holiday entitlement and contractual benefits. Pre-transfer pension promises move across in a slightly modified form (the new employer must offer at least matched contributions up to 6% under the Pensions Act).

For payroll, TUPE has several practical consequences. Year-to-date PAYE figures must be transferred by the old employer so the new one can apply cumulative tax codes correctly. Employees keep their existing tax code, NI category, student-loan plan and pension scheme membership unless and until those things change for an objective business reason. Dismissals 'connected with' the transfer are automatically unfair unless the employer can show an Economic, Technical or Organisational (ETO) reason involving changes in the workforce. Changes to terms made because of the transfer are also generally void.

Worked example: When CleanCo's £4 million office-cleaning contract moves from Provider A to Provider B, the 60 cleaners working on it are TUPEd over. Provider B inherits their three-year-and-counting service dates, their £12.21 hourly rate, their existing holiday balances, their tax codes and NI categories, and the obligation to keep matching pension contributions up to 6%. Provider B cannot 'harmonise' the cleaners' pay down to its standard £11.50 rate even years later if the change is connected with the transfer.