TUPE regulations 2006 (SI 2006/246) reg 4 (replacing TUPE regulations 1981 (SI 1981/1794) reg 5) is entitled "Effect of relevant transfer on contracts of employment".

This note takes account of the new TUPE regulations which came into force on 6th April 2006 (see notes at Transfer of business or undertaking/2006 regulations ). TUPE regulations 2006 (SI 2006/246) reg 4 replaced TUPE regulations 1981 (SI 1981/1794) reg 5 with effect from 6th April 2006.

go to next updated reference in this note.

The TUPE regulations apply when there is a transfer of an "undertaking" - as to which see Transfer of business or undertaking/what is an ''undertaking''? .

The main effects of TUPE are:

(i) the contract of employment of any employee covered by TUPE regulations is automatically "novated", without variation, to the new owner of the business. The regulations effect automatic transfer of employees' contracts when an employing business is sold/transferred (TUPE regulations 2006 (SI 2006/246) reg 4(1));

(ii) all the former employer's liabilities to such an employee arising from the employment pass to the new employer (TUPE regulations 2006 (SI 2006/246) reg 4 (2));

(iii) any such employee who is dismissed for a reason connected with the transfer will automatically be treated as unfairly dismissed and thus be eligible for compensation (TUPE regulations 2006 (SI 2006/246) reg 7 and Unfair dismissal/automatically unfair dismissals/connected with transfer of a business ).

Amongst articles of the EC Acquired Rights Directive (see European Law/directives etc/acquired rights directive ) implemented by TUPE regulations 2006 (SI 2006/246) reg 4 is Art 3 whose opening words are: "The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee". ECJ case law shows that the ambiguity resulting from this rather sloppy wording should be resolved so that the words "existing on the date of a transfer" refer to "contract of employment ...." not to "rights and obligations" (see Wendelboe v L J Music ApS (in liquidation) 19/83 [1985/6] 1 CMLR 476, ECJ).

See also Transfer of business or undertaking/who to sue? and/or Transfer of business or undertaking/economic, technical or organisational defence .