TUPE for the incoming employer: due diligence and liabilities

What you take on

On the transfer date, employees assigned to the transferring business or service become your employees on their existing terms, with their continuous service. Most rights and liabilities connected with their employment come with them, including claims that arose before the transfer.

Two main exceptions: criminal liabilities stay with the old employer, and so do rights to old-age benefits under an occupational pension scheme. You must still provide a minimum level of pension. Broadly, that means matching employee contributions up to 6% of basic pay, or matching what the old employer paid if that's less.

Due diligence: ask early, ask for more

The old employer must give you employee liability information at least 28 days before the transfer: identities and ages, written statements of terms, disciplinary and grievance records from the last 2 years, collective agreements, and claims made or expected. If it's late, wrong or missing, you can claim at least £500 for each employee affected.

28 days is too late to price a deal. Ask for this before you agree terms:

• a full list of who is assigned, with pay, hours, start dates and notice
• holiday balances and any pay owed at the transfer date
• pension arrangements, including any early retirement or redundancy terms, which can transfer
• enhanced redundancy schemes, bonuses and custom and practice
• open grievances, claims and tribunal cases
• anyone on long-term sickness, family leave or a fixed-term contract

Back it with warranties and indemnities in the commercial agreement, so the old employer carries the cost of what wasn't disclosed.

Measures: your duty before the transfer

Measures are any changes you expect to make that affect the transferring staff: a new location, pay dates, working patterns, pension, or redundancies. You must tell the old employer about them in time for it to inform its staff's representatives.

If you envisage measures, you must consult the representatives with a view to seeking agreement. You also have to inform and consult your own staff if the transfer affects them.

A tribunal can award up to 13 weeks' pay for each affected employee for a failure to inform or consult. Liability for the old employer's failure can be shared between both employers, so check it's covered in the agreement.

Changing terms after the transfer

A change to terms is void if the sole or main reason is the transfer, unless it's for an economic, technical or organisational reason entailing changes in the workforce, or the contract already allows it. Harmonising terms just to bring people into line is the classic case that fails.

Terms from a collective agreement can be renegotiated after a year, as long as the overall change is no less favourable.

From March 2027, the Employment Rights Act 2025 is expected to make it automatically unfair, in most cases, to dismiss someone for refusing a change to core terms such as pay or hours. That makes dismissing and re-engaging to harmonise much riskier.

Redundancies after the transfer

A dismissal because of the transfer is automatically unfair unless there's an economic, technical or organisational reason entailing changes in the workforce. A genuine redundancy can be one, but the usual fair process still applies: consultation, fair selection, alternatives and an appeal.

If you plan 20 or more redundancies, you can start collective consultation with the transferring staff's representatives before the transfer, if the old employer agrees. That can save weeks.

Service transfers in full, so redundancy pay and notice are based on the whole period with both employers. From 1 January 2027, anyone with 6 months' service can claim ordinary unfair dismissal.

Know the cost before you sign

Work out three figures for the transferring group: holiday and pay owed on day one, the yearly cost of employing them on their current terms including pension and employer National Insurance, and the exit cost if roles go after the transfer. Use them to price the deal and the indemnities.

On day one, write to each person with your details as their new employer and confirm that their terms have transferred unchanged. A change of employer has to be confirmed in writing within one month.