TUPE Compromise Agreements

This article considers compromise agreements in the context of TUPE.

The transfer of a business under TUPE and its associated employees is governed by regulations. TUPE means that employers need to be aware of the following basic principles:

The automatic transfer principle: employees transfer to the buyer who inherits all rights, liabilities and obligations in relation to them.

Secondly, those who are employed will gain to a degree protection when it comes to termination of employment if it is related to the business transfer itself.

Lastly, all business entities connected with the business transfer will have a legal duty to make employees aware of the transfer. This obligation will also mean that consultation is required.

Where a company fails in its obligations, a compromise agreement could avoid costly employment tribunals.

Compromise Agreements

Automatic transfer principle

Those who are employed at the time of the transfer gain rights which an employer needs to pay attention to. TUPE allows for extra protection for employees in the area of unfair dismissal. The usual rules which normally apply are added to.Under a TUPE transfer, anyone with 1 or more year of employment will be protected. If the employer proceeds to dismiss the employee, it will amount to unfair dismissal if:

1) Because of the TUPE transfer. The employee gains enhanced rights.

2) A reason connected with the transfer that is not an ETO reason entailing changes in the workforce.


Those undergoing a TUPE transfer have the right to the same working conditions and benefits. A new employer could place the employees in a position where they are forced to resign. This would constitute an automatic unfair dismissal.

Larger organisations may be placed in a position where unfair dismissal is forced. Affected employees may have a right to compensation. In such a scenario, there may be a need to consider how a compromise agreement might help. This is a tool to allow the employee to compromise the claim in exchange for a settlement sum.

Employers must enter into consultation with employees

It is important to note that employees have a right to know about the transfer and an obligation is placed on employers to consult. A company does not need to consult with everyone, only those affected by the proposed business transfer.

A company that fails to consult properly will open themselves up to liability. Those involved with the transfer may have to pay the affected employees up to 13 weeks pay. The TUPE regulations state that all businesses involved could be held liable for this failure jointly and severally.

Compromise agreements should be considered if a breach of the procedure is found. This will ensure that financial risk is managed properly.

Redundancy and Compromise Agreements
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