Just who is an affected employee in a TUPE transfer?

Where there is a relevant transfer under TUPE, a transferor is obliged to inform and, in certain circumstances, consult with appropriate representatives of “affected employees”.  Failure to do so can result in claims for protective award of up to 13 weeks pay per affected employee. 

Determining who is an affected employee is therefore important in determining both the employees in relation to who has a duty to inform prior to a TUPE transfer and the potential size of any protective award. 

The definition of “affected employee” found in regulation 13(1) of TUPE refers to employees affected by the transfer or the measures taken in connection with it.  In an attempt to flesh this out, previous case law said that affected employees can be those who will be or may be transferred, those whose jobs are in jeopardy by reason of the transfer itself, or who have job applications pending at the time of the transfer. 

In I Lab Facilities, the Employment Appeals Tribunal (EAT) considered who was an affected employee in the context of a business which comprised two distinct parts but where only one part was transferred.  This was relevant as the transferor had failed to inform and consult in relation to non-transferring employees.

The EAT held that the sale of one part of a business will not render those employed in other parts of a business that did not transfer “affected employees”.  For a non transferring employee to be an affected one, the employees would have to be directly affected by the transfer itself as opposed to, for example, an indirect consequence.  The example given of the latter is where the sale of one part of a business renders the other part less viable. 

This was not to say that employees who do not transfer will never be affected employees.  Employees who spend part of their time working in the business being transferred could be affected employees where the transfer results in the loss of work.  A common example of this is where the transfer of part of a business results in the reduction in work of central support services, such as finance, HR or administration.

The EAT’s decision is also notable as it confirmed that claimants cannot bring complaints for a breach of the obligation to inform or consult unless a TUPE transfer actually takes place.  This leaves an unusual but wholly logic position that:-

  • an employer must comply with its duty to inform and, if relevant, consult if it is likely a TUPE transfer will take place to avoid claims for a protective award; but
  • if for any reason the transfer does not materialise, no claim could be brought for any breach of that duty. 

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