TUPE Commercial Property UK: Buyer's Guide

Overview

TUPE is a set of UK regulations that protect employees when the business they work for, or the service they provide, changes hands. When TUPE applies to a transaction, the affected employees move across to the new owner or service provider on their existing terms and conditions, with their continuity of service preserved.

Their contracts, accrued rights, and most liabilities transfer automatically on completion. In a commercial property context, TUPE does not usually bite on a simple freehold or leasehold purchase where no business or service is transferring. The question becomes more complex when the property comes with an operating business, an in-house team, or outsourced services that the buyer intends to bring in-house or replace.

Common examples include buying a hotel, a care home, a leisure facility, a managed office, or taking over management of a multi-let building where on-site staff currently work. If staff are assigned to that undertaking or service, their employment can pass to the buyer on completion, along with liabilities for unpaid wages, holiday pay, pension arrears in some cases, and claims for unfair dismissal or discrimination.

Key steps

1. Ask early whether TUPE is in play. Raise the employment question at heads of terms stage, not after exchange. Ask the seller or landlord to confirm which employees work at or for the property, whether they are directly employed or engaged through a contractor, and whether the seller considers TUPE to apply to the transaction. Getting this on the table early shapes price, warranties, and indemnities. 2. Request and review employee information. Under TUPE, the transferor must provide Employee Liability Information to the transferee before completion, covering identity, age, terms, disciplinary and grievance history, and any pending claims. Push for this as soon as possible, along with contracts, payroll records, pension details, and any collective agreements. The earlier you see it, the more time you have to price the risk. 3. Work out who is genuinely assigned. Not every employee who sets foot on the property will transfer. TUPE only catches those assigned to the organised grouping being transferred. Look at how much of each person's time is spent on the site or service in question, whether their role is central to that operation, and whether they are deployed elsewhere in the seller's wider business. 4. Plan for information and consultation duties. Both seller and buyer have legal duties to inform and, where measures are envisaged, consult with affected employees through appropriate representatives. Failing to do this can trigger awards of up to 13 weeks' pay per affected employee. Agree between the parties who is doing what, and build a realistic timetable into the deal. 5. Negotiate warranties and indemnities. You cannot contract out of TUPE, but you can allocate risk between buyer and seller. Seek warranties on the accuracy of Employee Liability Information, on compliance with information and consultation duties, and on the absence of pending claims or unpaid liabilities. Back these up with indemnities for pre-completion employment liabilities that land on you after completion.

Common questions