Common TUPE myths, and why they're wrong

TUPE is one of those topics where certainty often masks confusion. I still hear the same misconceptions regularly: from line managers, from business owners, and occasionally from HR professionals who should know better.

Most of them are not wilful ignorance. TUPE is genuinely complicated, and the volume of case law that surrounds it does not make things simpler. But some of these myths are expensive to believe, and a transfer is not a good time to find out you had it wrong.

Here are the ones that come up most often.

"You can contract out of TUPE"

You cannot. If TUPE applies, no clause, side letter or commercial arrangement changes that. A well-structured commercial agreement can apportion liability between transferor and transferee (who picks up what cost if something goes wrong), but it does not alter the legal position. The legislation applies regardless of what the contract says.

This one matters because I have seen organisations negotiate commercial terms in good faith, believe they have managed the TUPE risk away, and then face the consequences when the workforce turns up on day one expecting their existing terms to be honoured. Which they are entitled to do.

"Rights only transfer for two years"

They do not. Terms and conditions, and continuity of employment, transfer indefinitely. There is no expiry date built into the legislation.

This also applies to second, third and fourth generation transfers. An employee who has transferred multiple times carries their original start date and original terms with them each time. The two-year figure gets cited occasionally in the context of unfair dismissal qualifying periods, which creates the confusion. But that is a different thing entirely.

The business cost of this misconception is that it creates a false sense of security. Organisations that believe liability will fade after two years stop managing the risk and can find themselves significantly exposed when it does not.

"You can harmonise after the transfer"

You cannot, at least not if the changes are connected to the transfer. Changes to terms and conditions that are made by reason of the transfer are void, even if the employees agree to them at the time. Employee consent does not override the legislation.

The fact that time has passed since the transfer does not automatically break the connection either. Courts and tribunals look at the real reason for the change, not just the timing. "We waited eighteen months" is not a defence if the change was always intended as part of the transfer.

For organisations that acquire businesses specifically to achieve cost synergies through harmonising terms, this is not a minor technical point. The business case built on post-transfer harmonisation may not be deliverable in the way the deal model assumed.

"Dismiss and rehire is a workaround"

Sometimes it is discussed as though it is a straightforward option. It is not. Dismissing employees in order to re-engage them on new terms has always been risky under TUPE, and the legal position is tightening further. The Employment Rights Act reforms will make fire and rehire unlawful except in very limited circumstances where a business can demonstrate that it had no reasonable alternative and faced genuine financial difficulty. That is a high bar, and it is meant to be.

Even where an employer claims an ETO reason (a genuine economic, technical or organisational reason entailing changes in the workforce), tribunals have always scrutinised whether that reason was real or whether it was being used as a pretext to harmonise terms post-transfer. With the legislative changes ahead, the room for manoeuvre is narrower still. Any organisation planning a transfer that involves changing terms needs proper legal advice before it acts, not after.

"It's just an HR issue"

It is not. TUPE is a business risk issue. The liability that sits in a workforce (terms, continuity, unresolved claims, pension entitlements) transfers with the people. If it has not been properly assessed, scoped and managed, it becomes a commercial problem, a legal problem and occasionally a reputational one.

The people workstream in a transfer is not administrative. It is one of the places where the deal can quietly go wrong after the handshake.

This article is intended as a general overview and does not constitute legal advice. TUPE situations vary considerably and specialist employment law advice should always be sought for specific cases.