On the date of the transfer, employees will automatically transfer to the new employer, along with their:
This means an employee's start date is the same as it was before the transfer and they do not get a new employment contract, it just continues.
The new employer must inform the transferred employees in writing that there's been a change of employer.
The new employer should confirm in writing:
The new employer might want to add these details to their written terms ('written statement of employment particulars').
The new employer should talk with staff soon after they transfer to keep them informed and listen to any concerns they may have. This will help to reassure and integrate staff, as well as build good working relationships.
Employees' terms and conditions of employment may include:
The new employer should assume all employee terms and conditions transfer unless they get different legal advice.
The new employer must meet the terms of the transferring employment contract. If not, it would be a breach of contract and an employee might be able to make a claim to an employment tribunal.
An employee's pension built up to the date of the transfer is protected.
Their pension may transfer to the new employer depending on if they have:
If they have a personal pension which the old employer was contractually obliged to contribute to, their pension rights will automatically transfer to the new employer. The new employer must pay the same amount into personal pensions as before the transfer.
If they have a workplace pension, it's unlikely to transfer to the new employer because it is exempt from TUPE. This means the new employer does not have to continue the same pension. But you must provide a reasonable alternative scheme.
Early retirement terms may also transfer to the new employer. This is a complex area of law so it's a good idea to get specialist pensions advice.
On the date of the transfer, the new employer becomes responsible for:
Collective bargaining agreements are agreements between the old employer and a trade union that affect employees' terms and conditions.
Many collective agreements continue for an indefinite period. For example, if employees' holiday (annual leave) is increased or a shorter working week is agreed, it is likely to continue indefinitely.
Some collective agreements may only cover a specific period. For example, an agreed change to employees' pay may only be for one year.
After one year, the new employer can renegotiate terms and conditions in collective agreements if overall it does not make an employee's employment contract worse.
Trade union recognition is when an employer agrees that their employees can be represented collectively by a trade union.
Under TUPE, trade union recognition only transfers to the new employer if the transferring employees keep a separate identity within the new employer's organisation.
If recognition transfers to the new employer, it will transfer with the same terms as with the old employer.
If the transferring employees do not keep a separate identity, the recognition agreement will end but the trade union could try and negotiate a new one.
Clothes Union is the recognised trade union for ShoppingCo's team of security staff. ShoppingCo decides to 'outsource' (transfer to a contractor) its security service and transfers its security team to Security Limited. Although they are now employed by Security Limited, the security staff continue to work at ShoppingCo and keep a separate identity to Security Limited's wider security workforce. Recognition of Clothes Union as the trade union for the security staff transfers to Security Limited.
Power Union is the recognised trade union for ElectricsCo's team of electricians. ElectricsCo merges with Sparksnet to form a new organisation, E-Spark. All of the staff transfer to E-Spark. The electricians from the old organisations become one workforce. The employees from ElectricsCo no longer have a separate identity from the other E-Spark employees so recognition of Power Union does not transfer.
On the date of the transfer, the new employer becomes responsible for:
The new employer is still liable for any outstanding holiday and pay even if they are unaware of these entitlements.
If any ELI provided by the old employer is inaccurate, the new employer may want to make a claim to an employment tribunal against the old employer.
An employee is transferred to a new employer in January. Their old employer previously paid a performance-related bonus in March. Their new employer is now responsible for paying them the bonus in March every year.
An employee's holiday year starts on 1 January and ends on 31 December. They have 10 days' holiday left when they transfer on 1 October. Their new employer must allow them to take this holiday before the end of their leave year, if the employee wants to.
The new employer must be careful when agreeing changes to transferred employees' terms and conditions. This is because there are other things to consider if the main reason for changing an employment contract is the transfer.