Business transfers and outsourcing

UK employment law reforms on the horizon (as of April 2026)

New Code to protect workers transferring to a supplier from the public sector

The Procurement Act 2023 will be amended to provide powers to introduce regulations and publish a statutory Code of Practice to protect workers who transfer on an outsourcing and those they will be working with.

Implementation Status

  • Consultation and regulations on proposals around the Code expected
  • ERA: Expected in force October 2026
     
Action
  • Any changes to the TUPE provisions will impact all employers involved in business transfers and outsourcings.
     
  • Employers engaged in public sector outsourcings will need to take account of the new Code of Practice in negotiations and service agreements and ensure that this is reflected in practice.   
In detail

  • The ERA provides for regulations to be made to ensure that in "relevant outsourcing contracts" where workers are transferring to a supplier from the public sector, transferring workers are treated no less favourably as workers of the supplier than they were as workers of the contracting authority they were transferred from and that other workers of the supplier (who are not transferring) are treated no less favourably than the ex-public sector transferring workers.

  • Contracting authorities will be required to take "all reasonable steps" to comply with the regulations and "have regard" to the code of Practice.

  • The government has also committed to reviewing "a variety of issues relating to TUPE regulations and process, including how they are implemented in practice". The Next Steps paper also indicated that the government would be taking forward wider measures, including a requirement for contracting authorities to carry out a public interest test before outsourcing and, when contracts come up for renewal, making social value mandatory in contract design, and using public procurement to raise employment standards.

  • The government has also indicated that it is looking to extend the Freedom of  Information Act to apply to private contractors providing public services and to publicly funded employers.

Impact

  • The power to make regulations and to impose a duty to publish a statutory code of practice are intended to avoid the emergence of a workforce consisting of ex-public sector employees and private sector employees, with each group on different terms and conditions (referred to as a "two tier workforce"). Employers should anticipate that the regulations will seek to address anti-avoidance measures and enforcement mechanisms.

  • Before the new government was elected, the previous government published a consultation looking at specific aspects of TUPE. One of these was to clarify that workers were not covered under the definition of employee – however, in light of the current government's proposals around employment status, this seems unlikely to be a point that is taken forward in the review.                                                                                                                                                                

TUPE Review: Call for Evidence

The government has published a Call for Evidence in line with its commitment to holistically examine a "wide variety of issues" relating to TUPE and process.

Implementation Status 

  • The Call for Evidence is open for responses until 1 July 2026
  • Any changes following the Call for Evidence will be subject to further consultation; reform is therefore not imminent.
Action
  • Keep a watch on the outcome of the Call for Evidence and any further consultations on specific proposals to reform the TUPE regime. 
In detail

The government's stated aims are to strengthen protections employees going through TUPE transfers and to modernise the regulations to improve efficiency. The Call for Evidence covers seven broad themes including:

  • The adequacy of the current protections
  • The practical difficulties in establishing whether a relevant transfer has taken place
  • The process of informing and consulting representatives
  • Varying terms and conditions
  • The guidance and support available to businesses
  • The financial and operational burden of TUPE transfers on business, and 
  • Whether TUPE has produced unintended consequences for individuals with a protected characteristic or those from specific socio-economic backgrounds. 
     
Impact
  • Any changes to the TUPE provisions will impact all employers involved in business transfers and outsourcings. Any proposals following the Call for Evidence will be subject to further consultation, so reform is not imminent but employers will need to keep a careful watch on developments.
  • At present however TUPE remains in its current form and employers should continue to apply it as usual.