Contents
- What is a TUPE transfer?
- When does a TUPE transfer of employees apply?
- What are employees’ rights under TUPE?
- What are an employer’s legal duties during a TUPE transfer?
- TUPE process step by step: Your TUPE transfer checklist
- How can payroll software support a compliant TUPE transfer?
- Support all your payroll and employee management processes with PeopleHR
What is a TUPE transfer?
A TUPE transfer, or Transfer of Undertakings (Protection of Employment), happens when employees move from one employer to another due to a business sale, outsourcing, or other service provision changes. Staff keep their contracts and continuity of service under a TUPE transfer, meaning they will move to the new employer on their existing terms and conditions.
Within UK law, a TUPE transfer of employees protects their existing contractual rights and continuity of employment, and clearly defines the responsibilities of both outgoing and incoming employers. While it safeguards employees, it can create risks for employers if processes aren’t managed carefully, including payroll errors, misunderstandings about benefits, or even legal disputes. Understanding the benefits and challenges of these transfers are vital for payroll managers to maintain compliance and staff trust.
When does a TUPE transfer of employees apply?
A TUPE transfer of employees doesn’t happen in every business change. Knowing when it applies helps payroll teams to anticipate responsibilities and prevent compliance issues. Let’s look at some scenarios where the transfer may be required.
Business sale or transfer
When a business or part of it is sold or transferred to a new employer, the employees attached to that business automatically transfer with it. This often happens during acquisitions, management buyouts, or when a specific function is sold off. Employees usually continue doing the same work, just under a new employer.
Dissolving two companies to make a third
If two companies merge or dissolve to form a new entity, affected employees can transfer under TUPE rules. This is common when organisations restructure to reduce costs, expand operations or combine expertise, and employees may move into equivalent roles within the new business.
Outsourcing to a new provider
When services are moved from an in-house team to an external provider, employees assigned to that service may transfer under TUPE. This often occurs when organisations outsource functions such as payroll, IT support or facilities management to improve efficiency or reduce overheads.
Bringing services back in house
If a previously outsourced service returns to internal delivery, TUPE may also apply. This can happen when an organisation wants greater control, improved service quality or cost certainty. Employees transferring back may keep the same role but will need to adapt to the employer’s internal processes and systems.
What are employees’ rights under TUPE?
Employees enjoy several protections under a TUPE transfer, meaning they can enjoy better stability and fairness in the event of business sale or restructuring. Let’s explore the main employee rights and how they affect payroll administration.
Automatic transfer of employment
With a TUPE transfer, employees automatically move to the new employer without losing their continuity of service. Payroll teams must maintain employment dates, accrued holiday and pension records to avoid issues that could arise under the Employment Rights Bill.
Protection against changes to employment terms
Existing terms and conditions cannot be changed simply because of the transfer. Payroll managers need to preserve pay structures, bonus schemes and contractual benefits to remain compliant with TUPE.
Protection against dismissal
Employees cannot be dismissed solely because of the transfer. Any reasons for redundancies or role changes must be carefully checked to ensure that they aren’t related to the transfer in a way that would trigger TUPE to avoid claims of unfair dismissal.
Right to object to the transfer
Employees can object to the transfer, which is treated the same as a resignation. A notice period isn’t required, and they won’t normally be able to claim redundancy pay or unfair dismissal. However, if an employee’s post-transfer working conditions are significantly worse, they may be able to claim unfair dismissal.
What are an employer’s legal duties during a TUPE transfer?
Before we get to our TUPE transfer checklist, it’s important to understand employer responsibilities during a transfer, and how payroll teams are often central to meeting them. Let’s look at the key areas employers must focus on.
Share information and consult properly
Employers must provide detailed information about affected employees and consult with them or their representatives. Payroll managers often prepare reports showing salaries, benefits and contracts to support consultations effectively.
Provide employee liability information (ELI)
Employee liability information (ELI) includes details of employment contracts, outstanding leave, disciplinary records, and any collective agreements. Sharing this accurately and on time is essential to prevent disputes and ensures that the new employer can maintain correct payroll processing.
Honour existing terms and conditions post transfer
The new employer must respect all existing employment terms. Payroll teams should ensure that salary, bonuses, pensions and deductions remain consistent, helping to avoid legal challenges and employee dissatisfaction.
TUPE process step by step: Your TUPE transfer checklist
A clear transfer process can save time, reduce errors, and keep both employers and employees compliant. We’ve put together a practical TUPE transfer checklist, which you can use to manage employee transitions efficiently and ensure compliance at every step.
1. Collect all employee data
Start by gathering full employment records, including pay, employee benefits, pension schemes, tax codes, deductions and holiday balances. Making sure that this data is complete before the transfer reduces errors and protects employees’ rights.
2. Check accuracy of pay and entitlements
Employment continuity is maintained after a TUPE transfer, meaning the employees’ salaries, bonuses, overtime and accrued leave before the transfer must be carried over. Payroll reports help to quickly and accurately check these entitlements and prevent mistakes when moving to the new employer.
3. Confirm statutory and contractual obligations
Make sure that statutory requirements such as minimum wage, pension contributions and holiday entitlements will be met post transfer. All contractual obligations, such as notice periods, benefits and statutory payroll deductions should be fully documented and checked.
4. Prepare for secure data handover and onboarding
Ensure that sensitive payroll data is transferred securely to maintain confidentiality and compliance. Using secure processes and adhering to payroll data security guidance during the handover helps to protect employee information and reduce the risk of breaches.
5. Update records and run validation checks
After the transfer, reconcile payroll, run validation checks, and correct any errors. Regular monitoring ensures that salaries, benefits and deductions are accurate, and helps to establish a smooth post-transfer process.
How can payroll software support a compliant TUPE transfer?
The right system can make this transfer simpler, faster, and less prone to errors. Let’s look at how payroll software can help to maintain compliance and streamline the onboarding process.
Improves data accuracy through automation
Payroll automation ensures that employee data is transferred correctly, reducing errors caused by manual entry. By using automated tools, employers can support a smooth payroll process by quickly reconciling pay, benefits and deductions while maintaining consistent records.
Supports compliance and auditing
Modern payroll software has payroll compliance tools built in, making it easy to create audit trails, flag missing information, and help employers to ensure that all statutory obligations are met. As well as supporting compliance with TUPE rules, dedicated software also simplifies payroll reporting and management post transfer.
Increases efficiency during employee onboarding
Onboarding new employees after the transfer is faster when payroll software integrates records seamlessly, calculates pay correctly, and sets up benefits automatically. This helps payroll teams to maintain accuracy and efficiency while ensuring that employees are set up correctly from day one.
Support all your payroll and employee management processes with PeopleHR
Managing a TUPE transfer of employees is complex, but a structured approach makes it manageable. Understanding what a TUPE transfer is, knowing employees’ rights, and following a clear transfer process ensures compliance and smooth payroll management.
PeopleHR’s payroll software simplifies the process by automating data transfer, maintaining compliance and supporting secure onboarding. Payroll teams can save time, reduce errors, and have the confidence that all statutory obligations are met.
to see how PeopleHR can help you to manage payroll and employee management efficiently, simply book a demo or get in touch and we’ll be happy to help.
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