TUPE Rules Are Under Review — What It Could Mean If You're Buying, Selling or Outsourcing

If you've ever bought, sold, or outsourced part of a business, you've likely run into TUPE — the Transfer of Undertakings (Protection of Employment) Regulations that automatically move employees, their contracts, and their accrued rights across to a new employer when a business or service changes hands. The government is now reviewing whether those rules still work as intended, and the outcome could reshape how business transfers are handled.

What's happening

On 8 April 2026, the government launched a call for evidence on TUPE, closing on 1 July 2026, according to Pinsent Masons. It forms part of the wider "Make Work Pay" agenda and set out 24 questions covering respondents' real-world experience of the TUPE process — everything from how consultation works in practice to how efficiently transfers are actually administered, per Browne Jacobson.

Crucially, the government has framed its objectives as twofold: supporting growth by making mergers, acquisitions and outsourcing arrangements run more smoothly, while simultaneously strengthening protections and benefits for transferring employees rather than diluting them, according to Withers. A formal government response and subsequent consultation on actual policy proposals are expected in due course, meaning no rule changes have been made yet — this is still evidence-gathering.

Why business owners should pay attention now

TUPE currently applies whenever there's a "relevant transfer" — a business sale, or a service moving between contractors (such as switching cleaning, catering or IT support providers). Transferring employees keep their existing terms, continuity of employment, and most contractual rights, and dismissing someone because of the transfer is automatically unfair in most circumstances. For small business owners, this often creates real friction: outsourcing a function can mean inheriting staff, their pension arrangements, and any historic disputes, with limited room to harmonise terms afterwards.

If reform proceeds, areas most likely to be examined include simplifying the consultation obligations for very small transfers, clarifying how TUPE applies to increasingly common fragmented or multi-employer outsourcing arrangements, and potentially easing the process for post-transfer contract harmonisation — though none of this is confirmed.

Checklist: what to do now if a transfer is on your horizon

• Don't wait for reform before planning a transfer. Current TUPE rules remain fully in force; any change is, at the earliest, a policy proposal away.
• Get early legal advice on employee liability information. The seller/outgoing contractor must provide detailed data on transferring staff well before completion.
• Budget for continuity, not savings. Assume transferring staff keep existing pay, holiday entitlement and pension rights — TUPE isn't a mechanism for cutting costs on day one.
• Consult affected employees properly. Skipping or rushing consultation is one of the most common — and expensive — TUPE failures for smaller employers.
• Watch for the government's response. Once published, it will signal which of the 24 consultation themes are likely to become real proposals.

Key Numbers

• Call for evidence launched: 8 April 2026
• Call for evidence closed: 1 July 2026 (Pinsent Masons)
• Questions posed to respondents: 24

Sources

• TUPE reform under spotlight as UK government launches call for evidence — Pinsent Masons
• UK government call for evidence on TUPE Regulations 2026 — Browne Jacobson
• The UK Government calls for evidence on TUPE — Withers
• Transfers and takeovers (TUPE) — GOV.UK

Educational content only — not financial advice.