This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to employee entitlements when a business is sold or transferred in England and Wales, explaining TUPE protections, continuity of employment, preservation of terms, pension rights, consultation obligations, and common issues for employees and employers.
When a business is sold or transferred to new ownership, employees do not lose their legal protections simply because the company's ownership changes. UK employment law, principally through the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), ensures that employees' rights, terms and conditions are preserved and that there are clear procedures for information, consultation and potential changes. This article explains what entitlements employees have when a business is sold or transferred, how the law protects continuity of employment, what employers must do, and practical considerations for both employees and employers.
What Happens When a Business Is Sold or Transferred
A business transfer or sale can occur in different ways. Sometimes a business or part of it is sold as a going concern; other times a service contract is transferred to a new provider, such as in outsourcing arrangements. Under TUPE, when a relevant transfer takes place, employees assigned to the part of the business that transfers will automatically move to the new employer by operation of law. Their existing contracts of employment continue as if originally made with the new employer, preserving their rights and continuity of service.
TUPE applies most commonly to asset sales of a business where the undertaking retains its identity. It does not normally apply to share sales, because the corporate employer remains the same legal entity despite a change in ownership of the company's share capital.
Who Benefits from TUPE Protection?
Employees benefit from TUPE protections when a business or part of it is transferred as a going concern. This generally includes:
- Full‑time and part‑time employees;
- Temporary and permanent staff consistent with their assignment to the transferring business;
- Employees whose work is integral to the business being transferred.
The key test is whether the employee is “wholly or mainly assigned” to the part of the business that is transferring. If they are, their employment contracts transfer automatically.
Core Employee Entitlements Under TUPE
Continuity of Employment
One of the most important protections under TUPE is that continuous service is preserved. This means that for statutory employment rights such as redundancy pay, unfair dismissal protection, notice entitlements and other length‑of‑service based rights, the employee's start date and ongoing service are treated as uninterrupted by the transfer.
Preservation of Terms and Conditions
Under TUPE, employees transfer on their existing terms and conditions of employment, including pay, holiday entitlement, hours, benefits and other contractual rights. The new employer effectively steps into the shoes of the old employer, inheriting all rights, powers, duties and liabilities arising from the contracts of employment.
This means the new employer must honour contractual entitlements such as accrued holiday, pay increments and shift allowances, and must respect collective agreements in force before the transfer.
Protection Against Dismissal and Unlawful Changes
Employees are protected against dismissal where the sole or principal reason is the transfer itself. If dismissals are necessary, for example for redundancy due to reduced work, they must be for a valid reason and follow a fair procedure.
The new employer cannot unilaterally change an employee's terms and conditions because of the transfer. Any change related to the transfer must be for an economic, technical or organisational (ETO) reason that entails changes in the workforce (for example, genuine restructuring) and, in practice, usually agreed with employees. Changes simply to align terms with the new employer's existing workforce without a valid ETO reason are void.
Information and Consultation Rights
Both the outgoing and incoming employers have statutory duties to inform and consult employees or their representatives about the transfer and its implications. This includes giving prescribed information such as the fact and timing of the transfer, reasons for it, its legal, economic and social implications, and any measures that either employer envisages in connection with the transfer.
Consultation must be meaningful and commence early enough for employees and representatives to engage with the proposals. A failure to inform and consult properly can result in claims for compensation in an Employment Tribunal.
Employee Liability Information (ELI)
Under TUPE, the seller must provide Employee Liability Information to the buyer at least 28 days before the transfer. This includes details such as employees' identities, age, terms and conditions, and information on any disciplinary actions or grievances within the last two years. If the seller fails to provide accurate ELI, the buyer may bring a claim for compensation reflecting any financial loss caused by that failure.
Right to Object
Employees have the right to object to the transfer. If an employee objects before the transfer takes place, their contract will terminate on the transfer date without a dismissal or redundancy. In such cases, they generally lose entitlement to redundancy pay or unfair dismissal compensation because they have effectively chosen not to transfer. However, if the objection relates to a substantial adverse change to working conditions, this may give rise to claims such as constructive unfair dismissal.
Pension Entitlements
Occupational pension rights accrued before the transfer are protected, but the new employer is not required to maintain the exact same pension scheme under TUPE. Instead, broadly comparable pension arrangements must be offered, often under the Transfer of Employment (Pension Protection) Regulations 2005, to ensure that employees' overall pension position is not materially worse after transfer.
Redundancy and Collective Consultation After Transfer
If the new employer needs to make redundancies after the transfer, they can do so for an ETO reason involving changes in the workforce, provided they follow a fair procedure. However, dismissals the sole or principal reason for which is the transfer itself may be automatically unfair. Additionally, where 20 or more redundancies are proposed within a 90‑day period, collective consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992 apply, requiring consultation with employee representatives for specified minimum periods.
Practical Considerations for Employees
Employees should ensure they receive clear written information about a transfer and seek to understand how their rights and contracts will be preserved. If an employer fails to provide required information or consult appropriately, employees may bring claims before an Employment Tribunal for compensation or other remedies.
Because TUPE protections are complex, employees affected by a transfer may find it useful to seek independent advice from trade unions, employee representatives, advice agencies such as ACAS, or employment solicitors to clarify their position and options.
Key Takeaways
When a business or part of it is sold or transferred in England and Wales, employees' entitlements are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), provided the transfer qualifies under the regulations. Key protections include automatic transfer of employment contracts with preservation of terms, continuity of service, protection from dismissals connected solely to the transfer, information and consultation rights, and safeguards regarding pensions and liabilities. Employees who believe their rights have been breached can pursue claims in an Employment Tribunal, and both sellers and buyers must comply with statutory duties to avoid legal risk.
