TUPE and outsourcing: what UK employers need to know

Key takeaways

TUPE outsourcing rules matter when you move work that UK employees currently do to a provider. The Transfer of Undertakings (Protection of Employment) Regulations protect employees in a service provision change: employees clearly assigned to the outsourced activity may transfer to the provider on their existing terms. Take advice before announcing any change.

• TUPE covers outsourcing, changing contractor and bringing work back in-house.
• It protects employees clearly identified as providing the service being transferred.
• It does not cover single events, short-term tasks or supply of goods.
• It can apply even when the work moves overseas; take advice in that case.
• Employers must inform, and where measures are proposed consult, affected staff.

What is TUPE?

TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006, is UK employment law that protects employees when the business or service they work in moves to a new employer. Their jobs, terms and conditions and continuity of employment transfer with the work.

This article is general information, not legal advice. TUPE is technical and fact-specific; take employment law advice before acting.

• What is BPO and how can it help UK businesses?

When does TUPE apply to outsourcing?

GOV.UK guidance says TUPE applies to service provision changes: when in-house services are outsourced to a contractor, when a contract ends and moves to a new contractor, and when work is brought back in-house. It applies to both business transfers and these service changes.

It does not apply where the contract is for the supply of goods for the company's use, or covers a single event or short-term task. Only employees clearly identified as providing the service being transferred are protected.

• Outsourcing: work done by your staff moves to a BPO provider.
• Retendering: work moves from one provider to another.
• Insourcing: work moves from a provider back to you.

• Switching BPO provider without losing service

Who transfers under TUPE?

Employees who are assigned to an organised grouping whose principal purpose is carrying out the activity being outsourced. Someone who spends most of their time on customer support in a dedicated support team is likely to be in scope; someone who answers the occasional call alongside a sales role is less likely to be.

If an employee objects to transferring, their employment usually ends without a dismissal, with limited exceptions. This is an area where advice matters.

Does TUPE apply if work moves offshore?

It can. Tribunals have found that TUPE can apply to a service provision change even when the service moves outside the UK. In practice, employees rarely relocate abroad, so the question often becomes one of redundancy, consultation and potential liability.

This is the area where getting specialist advice early is most valuable. The right approach depends on the facts, and handling it badly can lead to claims.

• Onshore, nearshore or offshore outsourcing?

What are the employer's duties?

Under TUPE, the outgoing employer must inform representatives of affected employees about the transfer, and consult them if any measures are proposed. It must also give the incoming employer information about the transferring employees. Dismissals because of the transfer are automatically unfair unless there is an economic, technical or organisational reason entailing changes in the workforce.

Timing matters: information must be given early enough for meaningful consultation. Plan the transfer timeline around these duties.

• A BPO transition plan for the first 90 days

How does TUPE affect cost and contracts?

TUPE affects who bears the cost of transferring employees, redundancies and any claims. BPO contracts often include TUPE clauses and indemnities allocating that risk between client and provider, both at the start and at exit. Read them carefully.

Many SMEs avoid TUPE issues entirely by outsourcing work that is new, growing or currently done by the owner, or by redeploying staff to other roles, rather than replacing an existing dedicated team.

• BPO contract terms to check before signing
• The hidden costs of outsourcing

When is TUPE unlikely to be an issue?

TUPE is unlikely to be an issue when no employee currently does the work as their main role, such as when the owner does it, when it is new work, or when the outsourced team handles overflow and extended hours while existing staff keep their roles. It is also unlikely for one-off projects. Check anyway if in doubt.

• Drowning in admin? How UK owners get their week back

What does this look like in practice?

Most of our UK clients outsource work that was falling on the owner or piling up unassigned, or add a team alongside existing staff to extend hours and absorb growth. In those cases staff roles often become more focused rather than disappearing. Where a change could affect an existing dedicated team, we recommend clients take employment law advice before planning the transition.

• See client work
• BPO Solutions for UK businesses

Checklist: TUPE before outsourcing

Work through these before announcing changes.

• Identify who currently does the work and how much of their time it takes.
• Decide whether an organised grouping is dedicated to the activity.
• Take employment law advice if anyone may be in scope.
• Plan information and consultation into the timeline.
• Read TUPE clauses and indemnities in the BPO contract.
• Consider redeployment or an alongside model.

Next step

If you want to outsource without disrupting your team, talk to us about models that work alongside your staff. 30 minutes, no pitch.