Who Qualifies for Redundancy Pay After a TUPE Transfer?

A TUPE transfer (Transfer of Undertakings (Protection of Employment) Regulations 2006) occurs when a business, service, or part of a business moves from one employer to another. Employees assigned to the transferring entity usually move to the new employer with their existing terms and continuity of employment preserved.

One of the most important issues during a TUPE transfer is redundancy pay. Employees often ask whether they retain entitlement to redundancy payments, whether statutory or enhanced, and what happens if their role changes or disappears after the transfer.

This article explains who qualifies for redundancy pay after a TUPE transfer, how eligibility is determined, and the legal principles that apply in England and Wales.

What Happens to Employees During a TUPE Transfer?

Under TUPE regulations, employees automatically transfer from the old employer (transferor) to the new employer (transferee) on their existing terms and conditions of employment.

Key protections include:

• Continuous employment is preserved
• Existing contractual rights transfer to the new employer
• Dismissals connected to the transfer are potentially automatically unfair
• Redundancy rights remain intact

The purpose of TUPE is to protect employees from losing rights solely because of a business transfer.

Who Qualifies for Redundancy Pay After a TUPE Transfer?

1. Employees who are dismissed for redundancy by the new employer

Employees may qualify for redundancy pay after a TUPE transfer if:

• Their role is genuinely made redundant after the transfer
• The dismissal is not solely because of the transfer itself
• They have at least 2 years' continuous service (including service transferred under TUPE)

Service before and after the transfer counts as continuous employment under TUPE regulations.

2. Employees whose roles cease due to post-transfer restructuring

Redundancy situations often arise after TUPE where the new employer:

• Integrates duplicate roles
• Reorganises departments
• Outsources or centralises functions
• Reduces headcount for business efficiency

If the role disappears and redundancy criteria are met, statutory redundancy pay may be due, subject to eligibility requirements.

3. Employees with continuous employment preserved under TUPE

A key principle is that TUPE preserves continuity of employment. This means:

• Employment start date remains unchanged
• Service with the old employer counts towards redundancy entitlement
• Statutory redundancy pay thresholds apply across both employments

Employees with at least 2 years' continuous service (including pre-transfer service) may qualify for statutory redundancy pay if later dismissed for redundancy.

4. Employees dismissed because of changes related to the transfer (not the transfer itself)

A distinction exists between:

• Dismissal because of the transfer (generally automatically unfair)
• Dismissal for an economic, technical, or organisational reason (ETO reason), potentially including redundancy

Where an ETO reason involves workforce reduction, redundancy pay may apply if legal conditions are met.

5. Employees offered alternative employment who are later made redundant

Employees transferred under TUPE may be offered alternative roles. If:

• The alternative role is unsuitable, or
• The employee is later dismissed after failing a trial period, or
• The new role is subsequently made redundant

they may still qualify for redundancy pay, provided statutory requirements are met.

Who Does Not Automatically Qualify?

Employees may not qualify for redundancy pay after a TUPE transfer where:

• They have less than 2 years' continuous employment
• Their dismissal is unrelated to redundancy (for example, misconduct)
• They voluntarily resign rather than being dismissed
• They unreasonably refuse suitable alternative employment offered by the new employer
• The role continues unchanged and no redundancy situation exists

TUPE protects employment continuity, but it does not guarantee redundancy pay unless legal criteria are met.

TUPE and the Legal Definition of Redundancy

Redundancy is defined under the Employment Rights Act 1996 as a situation where dismissal is due to:

• Business closure
• Workplace closure
• Diminished requirement for employees to carry out work of a particular kind

After a TUPE transfer, redundancy is only valid if the new employer can demonstrate one of these conditions exists independently of the transfer itself.

Continuity of Employment and Its Importance

Continuity of employment is central to redundancy entitlement after TUPE.

Under TUPE:

• Employment is treated as continuous across both employers
• Service with the previous employer transfers automatically
• Breaks in employment are disregarded unless legally significant

This affects:

• Eligibility for statutory redundancy pay
• Calculation of redundancy payments
• Qualification for unfair dismissal claims

Calculation of Redundancy Pay After TUPE

If redundancy occurs after a TUPE transfer, statutory redundancy pay is calculated using:

• Age of employee
• Length of continuous service (including pre-transfer service)
• Weekly pay (subject to statutory cap)

The formula is the same as for any redundancy situation under UK law.

Enhanced redundancy schemes may also transfer under TUPE if they are contractual or legally enforceable.

Enhanced Redundancy Pay and TUPE Transfers

Enhanced redundancy pay may transfer if it is:

• Written into the employment contract
• Incorporated into a collective agreement
• Established as a binding workplace custom and practice

If so, the new employer may be legally required to honour enhanced redundancy terms after the transfer.

Consultation Rights and Redundancy After TUPE

Where redundancies are contemplated after a TUPE transfer, employers must still comply with:

• Collective consultation obligations (if 20+ redundancies are proposed)
• Individual consultation requirements
• Fair selection processes

Failure to consult properly can lead to:

• Unfair dismissal claims
• Protective awards
• Increased tribunal compensation

Time Limits for Claims

Employees affected by redundancy after TUPE may bring claims within:

• 3 months less one day for unfair dismissal
• 3 months less one day for redundancy-related disputes (with ACAS early conciliation required)

Strict time limits apply regardless of TUPE status.

Common Legal Issues After TUPE Transfers

1. “Harmonisation” of terms

New employers cannot normally change terms solely to harmonise conditions after TUPE. Attempts to reduce redundancy rights may be legally unenforceable.

2. Transfer-related dismissals

Dismissals connected solely to the transfer are generally automatically unfair unless there is a valid ETO reason.

3. Failure to recognise continuity of service

Employers must include pre-transfer service when calculating redundancy entitlement. Failure to do so can result in tribunal claims.

Practical Steps for Employees

Employees affected by TUPE should:

• Confirm whether their employment has transferred under TUPE
• Check continuity of service records
• Review contract terms for redundancy provisions
• Request written explanation of redundancy selection
• Keep records of consultation and communications

These steps are relevant if redundancy arises after transfer.

Key Takeaways

Employees may qualify for redundancy pay after a TUPE transfer if they are later dismissed for redundancy and meet statutory conditions, including at least 2 years' continuous employment (including pre-transfer service). TUPE preserves employment continuity and protects redundancy rights, but does not guarantee redundancy pay unless a genuine redundancy situation arises. Employers must also comply with consultation obligations and fair selection processes following the transfer.