This note is concerned with "contracting out" of the TUPE regulations (ie attempts to agree that the regulations shall not apply in particular situations). It is not concerned with "contracting out" in the other sense in which that phrase is commonly used in a TUPE context, as to which see notes at Transfer of business or undertaking/contracting out of services .

The basic rule is that any attempt to contract out of the TUPE regulations is void (TUPE regulations 2006 (SI 2006/246) reg 18 which incorporates ERA 1996 s.203 - see notes at Contracting out of the legislation/a general introduction ). Thus for example an agreement between an employer and employee that the TUPE regulations or part of them shall not apply to them in a particular situation cannot be enforced.

However, as from 30th August 1993 special provisions have allowed an employee to opt out from having his contract automatically transferred to the new owner of the employing business ( TUPE regulations 2006 (SI 2006/246) reg 4(7), replacing TUPE regs 1981, reg 5(4A) with effect from 6th April 2006). If the employee exercises this right to opt-out his employment contract will not transfer to the new potential employer and the one with his current employer (ie the previous owner of the business) will automatically come to an end. But he will not have been "dismissed" and therefore will not have unfair dismissal rights or rights to statutory redundancy pay if his original employer does not offer him a new contract.

See also notes at Transfer of business or undertaking/two tier workforce .