The People Question: TUPE, Retention and What a Buyer Inherits

The MechanismTUPE is usually not what happens when you sell

Start with the point that surprises most owners. If you sell the shares in your company, TUPE does not apply to the sale at all. The employer is the company, the company has not changed, and everybody's contract of employment carries on untouched with a different name on the share register. The great majority of owner-managed FM businesses are sold this way.

TUPE applies if you sell the trade and assets rather than the shares, which happens more often in distressed sales and in carve-outs of a single service line. It also applies, and this is where it genuinely lives in this sector, every time a contract moves. A service provision change under the 2006 Regulations covers work being outsourced for the first time, retendered from one provider to another, or brought back in-house by the client, and it moves the people assigned to that work with it.

So the honest framing is this. TUPE is not a risk attached to selling your business; it is the machinery your business already runs on, and it operates several times a year whether or not you are thinking about an exit. What a buyer is assessing is how well you have run it.

The InheritanceWhat a buyer is actually inheriting with the workforce

Every term and condition that has ever transferred in. A cleaning operative who came across from a national contractor four years ago is still on that contractor's holiday entitlement, notice period, sick pay and shift premium, because a change to terms made by reason of the transfer is void. Multiply that by a decade of contract wins and you have a payroll where people doing identical work are on materially different terms, and no lawful way to tidy it up simply because it is untidy.

That is not a defect, and buyers do not treat it as one. What they treat as a defect is not knowing. The question in diligence is never whether your terms are harmonised; it is whether you can produce, per contract, who is assigned to it, on what terms, with what continuous service date, and what liabilities came with them. An owner who can do that in a week is describing a business under control.

The liabilities that travel are broader than the pay rates. Accrued holiday, pension obligations, outstanding pay awards, live grievances and disciplinary matters, and any claim arising before the transfer will generally sit with the transferee. Employers are required to provide employee liability information at least 28 days before a transfer, and the quality of the information you have received over the years is a fair guide to the quality of what you are able to hand over now.

Retention matters as much as records. In a sector where the contract is delivered by the people on the site, a buyer paying for a contract book is paying for the supervisors and managers who keep it. Long service on the key sites is read as a positive risk indicator, and a business where the site managers have been in place for years is a materially easier acquisition than one with a revolving door, whatever the two books look like on paper.

The StandardWhat a clean transfer record looks like from the outside

An employee schedule that ties to the contract register. For every contract, the people assigned to it, their role, hours, pay, continuous service date, whether they transferred in and from whom. If your payroll and your contract list cannot be reconciled to each other, that is the first job, and it is usually a fortnight of work rather than a project.

Evidence that consultation actually happened. The obligation to inform and consult appropriate representatives sits on both sides of a transfer, and for the smallest employers there is a route to consulting employees directly. Buyers are not looking for perfection here; they are looking for a pattern of the process having been followed, because a business that has cut corners on consultation is a business carrying claims nobody has quantified.

Clarity on who is an employee. Self-employed operatives, agency workers and labour-only subcontractors are common in FM and entirely legitimate, but the status question has to have been answered deliberately rather than inherited. A buyer will ask, and the answer decides whether a group of people is a flexible resource or an unquantified liability sitting under the contract book.

Buyers are not looking for perfection in a transfer record; they are looking for a pattern of the process having been followed.