What is TUPE? TUPE when a public contract changes hands

What is TUPE?

TUPE is short for the Transfer of Undertakings (Protection of Employment) Regulations 2006. It protects employees when the business or service they work in moves to a new employer. Under TUPE, says GOV.UK, “their employment terms and conditions transfer” and “continuity of employment is maintained”: the new employer takes them on as they are, and their years of service carry over.

It covers two kinds of change:

• A business transfer: a business, or part of one, moves from one employer to another, including in a merger.
• A service provision change: a service moves to a different provider, such as an in-house cleaning team being contracted out, one contractor replacing another, or the work coming back in house.

Public contracts are almost always the second kind, which is what the rest of this guide is about: what TUPE means when you win a contract someone else was delivering.

When TUPE applies to a public contract

The Transfer of Undertakings (Protection of Employment) Regulations 2006 cover business sales and what they call a service provision change. Under regulation 3 that includes a client bringing in a contractor for the first time, one contractor being replaced by another, and the client taking the work back in house. For it to apply:

• there must be an organised grouping of employees whose principal purpose is carrying out the activities for that client;
• the activities after the change must be fundamentally the same as before;
• the client must not intend the work to be a single specific event or a task of short-term duration; and
• the activities must not consist wholly or mainly of supplying goods for the client's use.

Acas lists catering, security, office cleaning, waste collection and machinery maintenance as contracts often covered, notes that a grouping can be a single employee, and says TUPE does not apply to a single event or short-term task such as a conference. If work is split between several new providers it is less likely to apply, and Acas recommends legal advice in that situation.

When it probably does not apply

• A contract wholly or mainly for supplying goods, such as stationery or equipment.
• A one-off project or short task, such as running a single event.
• Work done by staff who spend most of their time on other clients, so there is no grouping dedicated to this one.
• A service redesigned so that it is no longer fundamentally the same activity.

What transfers, and what you cannot change

Transferring employees' contracts carry on as if originally made with you, and the old employer's rights and liabilities under those contracts pass to you (regulation 4). That includes pay, hours, holiday, length of service and, generally, liabilities built up before the transfer.

A change to their terms is void if the sole or principal reason is the transfer. The exceptions are a change for an economic, technical or organisational (ETO) reason entailing changes in the workforce, which the employee agrees to, or one the contract already permits. Terms that came from a collective agreement can be changed more than a year after the transfer if, overall, the result is no less favourable to the employee. Dismissing someone because of the transfer is automatically unfair unless there is an ETO reason entailing changes in the workforce (regulation 7). Acas's guide on changing contracts after TUPE adds that you can harmonise terms upwards, but cannot trade better terms in one area for worse in another.

Employee liability information

The outgoing employer must give you employee liability information at least 28 days before the transfer, or as soon as reasonably practicable after that if special circumstances apply (regulation 11). It covers each employee's identity and age, their written statement of particulars, disciplinary and grievance matters and claims from the last two years, and any collective agreements. If it is not provided properly, you can bring a tribunal claim, and compensation is at least £500 per employee affected (regulation 12; Acas). The claim must be brought within six months of the transfer. The limit was three months until the Employment Rights Act 2025 extended it on 1 October 2026.

That arrives after award, so it cannot be the basis of your price. What you price from is the staff information in the tender pack. Central government's Mid-Tier Contract staff transfer schedule, for example, requires a supplier nearing the end of its contract to provide an anonymised provisional staff list with pay, terms and pension information, lets the buyer share it with prospective replacement suppliers, and has the supplier warrant it is accurate. Council and NHS contracts use their own terms, so check what your tender says.

Pensions

Old age, invalidity and survivors' benefits under an occupational pension scheme do not transfer under TUPE (regulation 10), but other protections fill the gap:

• Minimum pension. If the old employer had an occupational scheme the employee was in or eligible for, you must offer a pension (Pensions Act 2004, section 258). In a money purchase scheme that generally means matching the employee's contributions up to 6% of pay (SI 2005/649, regulation 3).
• Fair Deal. Staff compulsorily transferred out of central government, the NHS or maintained schools keep access to their public service pension scheme, including on later retenders, and the contractor agrees a participation agreement with the scheme before the transfer (Fair Deal guidance, last updated November 2024). The guidance does not apply to councils, which have separate arrangements.
• Local Government Pension Scheme. A contractor taking on a council service can become an admission body in the LGPS (LGPS Regulations 2013, Schedule 2, Part 3). The admission agreement requires a risk assessment and, where the risk calls for it, a bond or indemnity. When you leave the scheme an actuary values your liabilities, and you may owe an exit payment or receive an exit credit (regulation 64).

Informing and consulting staff

Both the old and new employer must inform the appropriate representatives of affected employees long enough before the transfer to allow consultation, and consult about any measures they intend to take (regulation 13). As the incoming supplier you must tell the outgoing one what measures you plan, so it can pass that on. An employer with fewer than 50 employees, or where fewer than 10 people are transferring, may inform and consult the employees directly if there are no existing representatives and it has not invited employees to elect any (regulation 13A). A tribunal can award up to 13 weeks' pay per employee for failures (regulation 16). If you plan 20 or more redundancies at one establishment within 90 days, collective redundancy consultation also applies, and with the outgoing employer's agreement you may start it before the transfer (TULRCA 1992, section 198A).

Pricing TUPE risk into your bid

Ask clarification questions where the data is incomplete, and say in your response which assumptions your price rests on. Then read the contract's indemnities. Under the Mid-Tier schedule, for example, where staff transfer from a former supplier the buyer agrees to procure that the former supplier indemnifies you for liabilities from before the transfer, but its guidance notes that this is only so far as the buyer is reasonably able. Indemnities do not cover liabilities you cause, such as proposing detrimental changes before the transfer. And when your own contract ends, the same duties run in reverse: you will supply staff information and indemnities to whoever comes next.

A worked example: an office cleaning contract

These figures are illustrative. A council retenders cleaning for six offices. The tender pack shows 12 cleaners employed by the outgoing contractor, working about 25 hours a week each, all dedicated to these sites. Their rate is 50p an hour above what you pay your own cleaners, two are in the LGPS, and one has an open grievance.

• Does TUPE apply? Probably: a dedicated team, the same activity, a continuing contract. Price on the basis that all 12 transfer.
• Pay gap. 12 people × 25 hours × 52 weeks × £0.50 = £7,800 a year above your usual cost. You cannot simply cut their rate to match, so build it in.
• Pensions. Ask the council for the LGPS employer contribution rate and any bond it will require, and price both.
• The grievance. Ask whether the outgoing contractor will indemnify you for liabilities from before the transfer. If not, allow for the risk.

If those costs make the contract unprofitable at the price you think will win, that is a bid or no-bid answer: see deciding whether to bid. If you are the incumbent, the same data helps you check what rivals must absorb; finding contract renewals shows how to spot these retenders early, and writing a tender response covers how to present a mobilisation and staff transfer plan.