In an increasingly volatile economic and regulatory landscape, organisations often undergo restructuring. This is through mergers, acquisitions, outsourcing, or insourcing to remain competitive or efficient. These changes may trigger obligations under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE).
TUPE is designed to protect employees when a business (or part of it) is transferred to a new employer, ensuring continuity of employment and preserving existing terms and conditions.
Restructuring (widely known as transformation) activity has increased over the past five years (2020 – 2025), this has been driven by economic pressures like inflation, rising rates, and reduced post-pandemic support.
Restructuring
Restructuring is a process where a company changes the way it operates or is organised to improve its financial health, stay competitive, or adapt to major changes in the market.
However, this is likely to have a significant impact on employees, and this can be both positive and negative, and therefore crucial to manage this impact carefully and effectively. This will be an uncertain time for the affected staff.
Restructuring is not implemented by using authority and control, it is achieved by involving all the relevant parties with a clear implementation plan. For a successful restructure, it is key that the Business involves staff or their representatives in the outset and the communication is meaningful.
The Business should consider all options, including any alternative suggestions and allow adequate time for these discussions to take place. This will bring trust into the process and will show that the Business has listened to all parties, with a view to reduce any unnecessary redundancies.
TUPE
TUPE stands for Transfer of Undertakings (Protection of Employment). It’s a UK employment law regulation designed to protect employees if the business they work for is transferred to a new employer.
The purpose is to ensure that terms and conditions of employment are preserved when a business is transferred to a new owner, this includes pay, annual leave, notice periods etc.
As part of the process, the employer has obligations to ensure that it informs and consults with the affected staff or their representatives, and to ensure that relevant written details (known as “employee liability information’) are provided timely to the new employer.
Following a TUPE transfer, the new employer can only make changes or legally dismiss a staff member for economic, technical or organisational (ETO) reason(s) and must not be solely due to the transfer itself, as this will be automatically unfair.
Challenges in a Changing Environment
There are a number of challenges to ensure that restructures & TUPE are completed timely. These include:
- In a fast-changing environment (e.g. rapid mergers, agile transformations), TUPE timelines and consultation obligations can clash with business urgency
- Determining who transfers, especially in shared service models or outsourced functions, can be legally grey and high-risk
- TUPE Regulations are legally binding and must be strictly followed. Any steps that are missed can lead to unfair dismissal claims or tribunal claims
Continuous restructures and transfers can lead to:
- Uncertainty about job security
- Change fatigue
- Stress and disengagement amongst staff (uncertainty)
- Fear of change continuing to happen (instability)
- Loss of key talent (critical skills or experience)
- Loss of motivation amongst staff
All the above can lead to organisational instability and affect business operations.
To help mitigate the above challenges, adopt the following:
- To have a people-centred approach, ensuring that staff or their representatives are involved in the outset
- To Involve HR & Legal early
- To ensure there is a clear communication plan to ensure everyone in kept informed
- To ensure adequate time is put away for consultation and follow a checklist, plan on doing more than the legal minimum
- To ensure staff are supported throughout, including utilising the services of your EAP (Employee Assistance Programme); if applicable
- To start to think about and devise a contingency plan