The government has launched a pivotal "call for evidence" aimed at informing significant policy changes to the Transfer of Undertakings (Protection of Employment) regulations, widely known as TUPE. This strategic move is integral to the broader "Plan to Make Work Pay," which incorporates the forthcoming Employment Rights Act 2025, and underscores a commitment to fortifying workers’ rights across the United Kingdom’s labour landscape.
The initiative seeks to navigate the complex interplay between safeguarding employee entitlements during business transfers and fostering an environment conducive to economic growth and corporate flexibility. Specifically, ministers are inviting comprehensive input from unions, businesses, and employees to "better ensure TUPE is easy to follow for businesses to support growth and create a better environment for businesses to expand, sell, or merge." Concurrently, the government has pledged to "consider how to strengthen the existing set of rights and protections for those subject to TUPE to create a more stable workforce during transitions" and to "develop policy proposals for reform." The window for submitting evidence is open until 11 July 2026, marking a critical period for shaping future employment legislation.
Understanding TUPE: A Foundation of Employee Protection
The Transfer of Undertakings (Protection of Employment) regulations are a cornerstone of UK employment law, designed to protect employees’ rights when the business or undertaking for which they work transfers to a new employer. Originating from the European Union’s Acquired Rights Directive, TUPE ensures that employees automatically transfer to the new employer on their existing terms and conditions of employment. This includes preserving continuity of service, which is crucial for entitlements such as redundancy pay, unfair dismissal protection, and notice periods. The regulations apply to various scenarios, including mergers, acquisitions, and the outsourcing or insourcing of services.
Historically, TUPE has been lauded for providing a vital safety net for workers, preventing employers from circumventing their obligations by simply transferring operations. Without TUPE, employees could face arbitrary dismissal or a unilateral imposition of less favourable terms upon a change of ownership or service provider. However, the regulations have also frequently been criticised by businesses for their perceived complexity, rigidity, and the administrative burden they impose, particularly in nuanced transfer situations. Balancing these competing interests – robust worker protection against the need for business agility and growth – forms the central challenge that the current call for evidence aims to address.
A Policy Timeline: From Announcement to Implementation
The genesis of this comprehensive review can be traced back to October 2024, when the "Next Steps document" first publicly announced the government’s intention to launch a call for evidence regarding TUPE. This initial announcement signalled a broader governmental focus on employment law reform, culminating in the drafting of the Employment Rights Act 2025. While the Act itself does not directly amend TUPE, its provisions are set to significantly influence how TUPE regulations operate in practice, creating a domino effect across various aspects of employee rights.
Looking ahead, the timeline for related legislative changes highlights the urgency and interconnectedness of these reforms. The "fire and rehire" provisions within the Employment Rights Act 2025 are slated for introduction in January 2027. These provisions are expected to fundamentally alter the landscape for employers seeking to dismiss employees and re-engage them on new terms, a practice that has been a contentious issue in UK industrial relations. Furthermore, October 2026 will see the implementation of new protections designed to prevent "two-tier workforces," particularly pertinent in outsourced services, ensuring parity of treatment for workers. The closure of the call for evidence on 11 July 2026 positions this consultation at a critical juncture, allowing the government to integrate public and stakeholder feedback before these significant legislative changes take full effect.
The Interplay with the Employment Rights Act 2025: Indirect but Profound Impacts
Although the Employment Rights Act 2025 does not contain direct amendments to TUPE, its measures to bolster workers’ rights are poised to profoundly reshape the application and implications of TUPE regulations. This indirect influence will necessitate careful consideration by businesses engaged in transfers and a re-evaluation of their due diligence processes.
One of the most significant anticipated impacts concerns the qualifying period for protection from unfair dismissal. The Act is set to increase this period to six months. While seemingly a standalone measure, this change will elevate the potential liability for transferees – the companies receiving employees – particularly where pre-existing disciplinary or grievance processes are underway. For instance, if an employee with less than six months’ service is transferred, and subsequently dismissed by the transferee, the transferee might face a claim for automatic unfair dismissal if the reason for dismissal relates to the transfer. This extension of protection means that transferees must now factor this increased risk into their due diligence and costings during the acquisition or outsourcing process, potentially making transfers more complex and costly. Companies will need to conduct more thorough audits of transferring employees’ employment histories and any ongoing disputes to accurately assess potential post-transfer liabilities.
Moreover, the Act’s "fire and rehire" provisions, slated for introduction in January 2027, represent another critical development. Historically, some transferees have resorted to dismissal and re-engagement to implement changes in terms and conditions following a TUPE transfer, particularly when seeking to harmonise employment terms. This controversial practice, often viewed as a coercive tactic, has drawn significant criticism from trade unions and worker advocacy groups. The new provisions in the Employment Rights Act are expected to impose stricter legal hurdles, potentially making such actions legally untenable or significantly more challenging. Employers will likely face enhanced consultation requirements, stricter justification thresholds, and potentially higher risks of legal challenge, thereby limiting their ability to unilaterally alter terms post-transfer. This shift aims to provide greater job security and protect employees from the erosion of their terms and conditions, but could reduce operational flexibility for businesses.
A further impactful measure is the Act’s drive to eliminate "two-tier workforces," which is expected to come into force in October 2026. This provision aims to address situations where employees, often those transferred from the public sector to a private contractor or vice versa, perform the same work but are employed on vastly different terms and conditions. The Act will require parity of treatment for workers delivering outsourced services, a measure that legal experts, such as Lewis Silkin, suggest could extend beyond typical TUPE obligations. Lewis Silkin stated: "For organisations involved in public sector outsourcing, that raises important questions about how workforce terms are structured, not just at the point of transfer but across the life of the contract." This signifies a move towards greater equity in pay and benefits, potentially compelling transferees to invest more in harmonising terms, thereby increasing operational costs but fostering a more equitable working environment. This particular reform addresses a long-standing grievance among public sector workers whose terms were often significantly diluted upon transfer to private providers, creating a perceived ‘race to the bottom’ in terms and conditions for outsourced services.
Addressing Longstanding TUPE Challenges Beyond the ERA 2025
Beyond the direct and indirect influences of the Employment Rights Act 2025, the government’s call for evidence also aims to tackle several longstanding issues within TUPE that have caused confusion and frustration for businesses and employees alike. These issues, though not directly addressed by the new Act, represent areas where legislative clarity or reform could significantly improve the efficiency and fairness of transfer processes.
One such area of ambiguity concerns whether employees can transfer to multiple employers. In complex transfers, particularly those involving partial outsourcing or carve-outs of specific functions, the question of how an employee’s employment is divided or apportioned across multiple new employers remains a legal grey area. This can lead to disputes over who is responsible for which aspects of the employee’s terms and conditions, or even who is the employer for certain periods. Clarifying this aspect would provide much-needed certainty for both transferring employees and recipient businesses, streamlining complex transactions and reducing potential litigation.
Another significant pain point relates to the restrictions on changing terms and conditions post-transfer. While TUPE is designed to protect existing terms, businesses often encounter "sensible business reasons" for harmonising terms with their existing workforce. For example, a transferee might acquire a smaller company whose employees have different holiday entitlements, pension schemes, or working hours. Integrating these new employees into the transferee’s existing HR framework can be challenging under current TUPE rules, which largely prohibit detrimental changes related to the transfer. The call for evidence invites proposals on how to balance employee protection with the legitimate business need for harmonisation, potentially exploring mechanisms for negotiated changes or specific exceptions under defined circumstances, provided they are not solely transfer-related.
Perhaps one of the most frequently cited frustrations for businesses revolves around the requirement for an "economic, technical, or organisational" (ETO) reason for redundancies in a TUPE situation. Under current regulations, dismissals related to a transfer are automatically unfair unless they are for an ETO reason involving changes in the workforce. Lewis Silkin highlighted that this often results in redundancies being delayed until immediately after the transfer, allowing the incoming employer to implement them with a valid ETO reason. This delay can occur "even where there is a clear ‘place of work redundancy’, particularly evident as a result of an ‘offshoring’." Such delays create uncertainty for employees, prolong the transfer process, and can be inefficient for businesses. The firm suggested two potential solutions: either removing the ETO requirement entirely for transfer-related redundancies or legislating that outgoing employers should be able to rely on incoming employers’ ETO reasons to carry out redundancies pre-transfer. This would allow for more timely and efficient restructuring, aligning with business operational needs while still ensuring fairness. The current rigidity can lead to perverse outcomes, where a clear business need for redundancy is artificially postponed, increasing costs and anxiety.
Stakeholder Perspectives and Divergent Opinions
The call for evidence is designed to elicit a broad spectrum of views, acknowledging that TUPE impacts various stakeholders differently. Trade unions are likely to advocate for even stronger protections, viewing TUPE as a critical bulwark against corporate restructuring that could undermine workers’ rights. They will likely push for clearer definitions, robust enforcement mechanisms, and a tightening of any loopholes that might allow employers to erode terms and conditions. Conversely, many businesses, particularly those engaged in frequent mergers, acquisitions, or outsourcing, will likely champion greater flexibility, reduced administrative burden, and clearer guidance on complex scenarios such as multi-employer transfers and harmonisation of terms.
However, the legal community itself is not unanimous on the necessity or timing of radical TUPE reform. Anthony Wilcox, a partner in employment law at TWM, articulated a cautious perspective. He stated: "The TUPE regulations have long had a reputation for being complicated, but over time they have evolved and become much more of a known quantity. They strike a good balance, protecting employee rights when businesses are transferred or services are outsourced, whilst also allowing employers to make the changes that their businesses require." Wilcox further questioned the timing of such a review, remarking: "At a time when significant employment law changes are being formulated and implemented, with the effects of these changes on businesses and the employment tribunal system still largely unknown, it is far from clear that this is the right time to look at making changes to TUPE." This viewpoint suggests a preference for stability and an assessment of the impacts of the Employment Rights Act 2025 before embarking on further, potentially disruptive, amendments to TUPE. His argument resonates with the idea that constant legislative flux can create uncertainty for businesses and place additional strain on the legal system, which is already adapting to new regulations.
Broader Impact and Implications for the UK Economy
The outcome of this call for evidence and the subsequent policy reforms will have far-reaching implications across the UK economy. For businesses, the changes could lead to increased complexity in due diligence and transaction planning, particularly given the enhanced unfair dismissal protections and "fire and rehire" restrictions. While some reforms might offer greater clarity in areas like ETO reasons or multi-employer transfers, the overall trend points towards a heightened need for expert legal and HR advice during transfers. This could impact the speed and cost of M&A activity and outsourcing decisions, potentially influencing investment flows and market dynamism. The government’s stated aim to "support growth" and create a "better environment for businesses to expand, sell, or merge" suggests an intent to streamline processes, but the balance with worker protection will be key to achieving this without unintended consequences.
For employees, the reforms generally signal a strengthening of their position. The "two-tier workforce" protections promise greater equity, while restrictions on "fire and rehire" offer enhanced job security. These measures contribute to the government’s broader objective of creating a "more stable workforce during transitions," fostering employee confidence and potentially reducing industrial disputes. However, if the reforms lead to an overly rigid framework, businesses might become more hesitant to undertake transfers or expand through acquisitions, which could indirectly affect job creation and opportunities.
Ultimately, the government’s initiative represents a critical juncture for UK employment law. It is an ambitious attempt to recalibrate the balance between worker protection and business flexibility within the context of a modern, dynamic economy. The success of these reforms will hinge on the government’s ability to synthesise the diverse evidence received, craft clear and implementable policy proposals, and effectively communicate the changes to all stakeholders. The coming months, leading up to the evidence deadline and beyond, will be crucial in determining the future landscape of employee rights and business operations in the UK.
