TUPE Is Not an HR Process. It’s a Commercial Negotiation You’re Letting HR Handle Alone.

When a TUPE transfer appears in a transaction, an outsourcing arrangement, or a service provision change, the delegation pattern in most businesses is immediate and predictable. The commercial team has negotiated the deal. The lawyers have drafted the agreements. And the TUPE process, which is treated as a procedural compliance exercise, is handed to HR to manage.

HR consults with affected employees. HR produces the employee liability information. HR holds the information and consultation meetings. HR manages the correspondence. The commercial team has moved on to the next deal point. The lawyers are reviewing indemnity clauses in the sale agreement but are not coordinating with the HR team managing the transfer on the ground.

The result is that the most commercially significant people dimension of any transaction, the allocation of employment liabilities between transferor and transferee, the negotiation of measures that will shape the transferred workforce, and the harmonisation strategy that will determine whether the combined workforce is manageable or a legal minefield, is handled by the function least involved in the commercial negotiation and least empowered to influence its terms.

This is, to put it directly, a structural error that costs businesses money with remarkable consistency.

What TUPE Actually Requires

The Transfer of Undertakings (Protection of Employment) Regulations 2006 require that when a relevant transfer takes place, the contracts of employment of affected employees transfer automatically from the transferor to the transferee. The employees transfer on their existing terms and conditions. Dismissals connected to the transfer are automatically unfair unless the employer can demonstrate an economic, technical, or organisational reason entailing changes in the workforce, the so-called ETO defence.

The information and consultation obligations are specific. The transferor must provide the transferee with employee liability information: identity, age, terms, disciplinary and grievance records, and any legal proceedings. Both transferor and transferee must inform and consult with appropriate representatives about the transfer, its timing, its reasons, and any measures the employer envisages taking in connection with it.

Most businesses focus on these obligations because they are the procedural requirements that generate immediate legal risk if not followed. But the procedural requirements are the compliance floor, not the commercial ceiling. The commercial value in a TUPE transfer is in the negotiation that happens around the compliance, and most businesses either do not realise this or delegate it to people who are not equipped to conduct it.

The Liability Allocation You Are Not Negotiating

In any TUPE transfer, there is a question of who bears the cost of employment liabilities that arose before the transfer but materialise after it. A tribunal claim brought by a transferred employee for events that occurred under the transferor’s management. A redundancy liability for an employee whose role becomes surplus post-transfer. A contractual claim relating to terms agreed by the transferor that the transferee considers uncommercial.

The default position under TUPE is that these liabilities transfer with the employee. The transferee inherits them. The only protection the transferee has is the indemnities negotiated in the commercial agreement, and the quality of those indemnities depends entirely on the quality of the negotiation and the due diligence that informed it.

At Esbee, when we support clients through TUPE transfers, whether as part of a PE acquisition or a standalone service provision change, the liability mapping exercise is where we start. Not with the consultation timeline, not with the employee communication plan, but with a detailed assessment of what liabilities exist, where they sit, what the transfer means for their allocation, and what the commercial agreement needs to contain to protect the client’s position.

This is not HR work. It is commercial work with an employment law dimension, and it requires someone who understands both the legal framework and the commercial context to conduct it effectively.

TUPE is treated as compliance. The real value is the commercial negotiation that most businesses delegate to HR and never think about again — until the liabilities materialise.

The Measures Conversation Nobody Has Properly

Under TUPE, both transferor and transferee are required to inform and consult about any “measures” they envisage taking in connection with the transfer. Measures means any action, step, or arrangement that the employer plans to take that will affect the transferred employees. Changes to reporting lines, office location, working patterns, team structure, benefits, or anything else that changes the employee’s experience.

The measures obligation is the point at which the commercial integration plan meets the legal consultation requirement, and it is the point at which most businesses fail to coordinate the two. The commercial team has a post-transfer integration plan that involves restructuring the combined workforce, harmonising terms, and potentially making redundancies. The HR team is managing the TUPE consultation to the statutory requirements. These two workstreams should be running in lockstep. In practice, they are often running in parallel with minimal communication, producing consultation communications that either promise too much (by failing to mention measures that are planned but have not been disclosed) or promise too little (by disclosing measures so vaguely that the consultation is not genuinely meaningful).

The consequence of failing to disclose measures properly is that the consultation is defective, which means the transfer, while still legally effective, carries an unresolved procedural risk that the transferee inherits along with the employees. A transferred employee who subsequently discovers that significant changes were planned but not disclosed during consultation has a claim for failure to inform and consult, with a potential award of up to thirteen weeks’ pay per affected employee.

The Harmonisation Trap

Post-transfer harmonisation of terms and conditions is the area where the most commercially significant and the most legally complex challenges in any TUPE process intersect. The transferee now employs two groups of people doing the same or similar work on different terms. The commercial instinct is to harmonise: bring everyone onto the same terms, simplify the management, and reduce the administrative overhead.

The legal reality is that changes to terms and conditions where the sole or principal reason for the change is the transfer are void under TUPE. This means that simply issuing new contracts to transferred employees on the transferee’s standard terms is not effective, even if the employee signs them. The protection persists.

The only route to lawful harmonisation is to demonstrate that the change is for an ETO reason unconnected with the transfer itself, which typically means waiting a reasonable period and then implementing the change for a genuine organisational reason that would apply regardless of the transfer history. The definition of a “reasonable period” is not fixed, and the case law provides limited guidance, which means that every harmonisation exercise involves a risk assessment about timing, motivation, and documentation.

Equal pay risk adds a further dimension. Two groups of employees doing equal work on different terms creates a potential equal pay claim, particularly where the transferred employees are predominantly of one gender and the existing employees are predominantly of another. The employer is caught between TUPE, which prevents harmonisation connected to the transfer, and equal pay law, which penalises the continuation of unequal terms. Navigating this requires specific expertise and a willingness to address the tension rather than ignore it.

The ETO Defence You Probably Do Not Have

Dismissals connected with a TUPE transfer are automatically unfair unless the employer can establish an ETO reason entailing changes in the workforce. The ETO defence is narrower than most businesses assume. “Economic” does not mean any financial reason. “Organisational” does not mean any structural change. “Changes in the workforce” means changes in the numbers or functions of the workforce, not changes in terms and conditions.

A business that makes a transferred employee redundant because their role is genuinely surplus post-transfer has an ETO defence. A business that dismisses a transferred employee because they refuse to accept harmonised terms does not, because the change in terms is connected to the transfer, not to a change in the workforce.

Esbee’s HR services team advises on the application of the ETO defence in real time, during the transfer process, because the decisions made about restructuring, harmonisation, and role design in the weeks following a transfer determine whether the ETO defence is available. Retrospective justification is rarely convincing to a tribunal. The reasoning needs to be documented contemporaneously, with sufficient specificity to demonstrate that the decision was driven by the stated ETO reason and not by the transfer itself.

The Uncomfortable Conclusion

TUPE is treated by most businesses as a compliance exercise managed by HR. The compliance requirements are real and must be met. But the commercial significance of a TUPE transfer, the allocation of liabilities, the negotiation of measures, the harmonisation strategy, and the application of the ETO defence, is far greater than the compliance dimension, and it requires commercial and legal judgment that most HR functions are not resourced or empowered to provide.

The businesses that handle TUPE well are the ones that treat it as a boardroom issue, not an HR admin task. They coordinate the commercial negotiation with the compliance process. They map liabilities before the transfer, not after. They plan their harmonisation strategy with legal input from the outset. And they make post-transfer decisions about the workforce with full awareness of the ETO requirements, rather than discovering them when a claim is brought.

The businesses that handle TUPE badly discover the cost of their approach in the months and years following the transfer, when the liabilities they did not map, the harmonisation they did not plan, and the measures they did not disclose produce claims, costs, and operational problems that a properly managed process would have prevented.

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If you’re facing a TUPE transfer, as transferor or transferee, and want to ensure the commercial dimension is managed alongside the compliance requirements, talk to us. Esbee’s HR services team manages TUPE processes with a commercial focus, not just a procedural one.