Background

On 8 April 2026, the Department for Business and Trade published a call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

In this response

Responses to specific questions

Q3. To what extent do you agree or disagree that the current TUPE consultation requirements are sufficient to ensure employees are informed and consulted with when a transfer takes place? Please explain your answer.

Interaction between TUPE consultation requirements and pensions “listed change” consultation requirements

The statutory consultation regime for pension changes[1] requires employers with 50 or more employees to consult affected members before implementing certain prescribed “listed changes”, such as closing a scheme to future accrual of benefits or removing the liability to make employer contributions.  This involves, among other things, consulting the employee representatives of the affected members for a period of at least 60 days.[2]

By contrast, TUPE requires employers to inform and, where certain “measures” are envisaged, consult with representatives of affected employees before a transfer.[3] There is no prescribed minimum consultation period – the requirement is to consult “long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives”.

Changes arising from a TUPE transaction

Where pension changes arise as a result of a TUPE transfer, there is some longstanding uncertainty as to whether a separate listed change consultation is required, or whether the change can be addressed through the TUPE “measures” consultation.  This is particularly significant in relation to the period over which consultation must take place, given the 60-day requirement for a listed change consultation.

Where a change occurs as a direct result of a TUPE transfer (eg a member ceases to be an active member because the receiving employer is not a participating employer in the scheme) there is an argument that only the TUPE consultation requirements apply.  In such circumstances the parties may decide to take a pragmatic view that there is no need for a “listed change” 60-day consultation on the basis that any pensions change is a by-product of a TUPE transaction rather than a pensions change being proposed by an employer in its own right.

The position is even less clear where a pension change is not a direct consequence of the TUPE transfer, but is being made in connection with the overall process to which the TUPE transfer relates.  For example, where the default position under the scheme rules is that the transferring employees would continue to accrue benefits whilst in service with the receiving employer, so the parties execute a deed which provides for the termination of their active membership at the point of the transfer.

Given these uncertainties, deciding not to run a 60 day “listed change” consultation is not risk free, so some employers may decide to run concurrent consultations, or run the TUPE consultation for 60 days.  However, this often doesn’t fit in well with corporate transactions as:

  • pensions proposals may not be sufficiently developed 60 days ahead of the transfer, or the transaction may not be public at that stage, and
  • there isn’t really a relevant decision that you are taking for pension consultation requirements – any “listed change” is a function of the wider TUPE transaction, rather than a standalone decision.

It would be helpful if the interaction between these two requirements could be clarified, for example, with an exclusion from the listed change requirements where (i) the change is directly connected to a TUPE transaction and (ii) a TUPE consultation is taking place in respect of the “listed change”.

Q5.  Under the current rules, pension rights under a personal pension which the old employer was contractually obliged to contribute to will automatically transfer to the new employer. Benefits in occupational pension schemes (sometimes known as workplace pensions), that relate to old age, invalidity, or survivors, are exempt from TUPE, so they do not automatically transfer from the old employer to the new employer. To what extent do you agree or disagree that employee pension rights are sufficiently protected under a TUPE transfer?

Although benefits in occupational pension schemes that relate to old age, invalidity, or survivors are exempt from TUPE,[4] pension provision does benefit from limited protection under pensions legislation.[5]  Very broadly speaking, if the transferring employer contributed to an occupational pension scheme (DC or DB) in respect of any employee, then the new employer must provide that the employee is, or is eligible to be, an active member of a DC occupational pension scheme to which the transferee either:

  • matches the employees’ contributions up to a maximum of 6% of basic pay, or
  • matches the transferor employer’s contributions, where it had been under an obligation to make them, provided these had been solely for the purposes of producing money purchase benefits.

Alternatively, the new employer can provide DB benefits which meet certain requirements, but this is rare in practice.

Distinction between master trusts and group personal pension schemes (GPPs)

There is a clear difference in treatment for employees in DC schemes following a TUPE transfer (in terms of the level of protection they are entitled to) depending on the type of scheme they were in pre-transfer. If they were in a contractual arrangement such as a GPP, there is like-for-like protection under TUPE but if they were in an occupational DC pension scheme, there is only limited protection (as explained above).  When TUPE was drafted, the workplace pensions landscape generally consisted of either (i) GPPs or (ii) employer’s own trust based occupational pension scheme.  The difference in treatment between trust-based schemes and GPPs made sense, as it was easy for the purchaser to replicate the terms of a GPP, whereas the benefits in an employer’s own trust-based scheme would be more complicated to replicate.

However, since the introduction of automatic enrolment, we have many DC master trusts, which are occupational pension schemes generally set up by insurers for unconnected employers to use to satisfy their automatic enrolment obligations, rather than set up by an employer for its own employees.  Many employees aren’t aware of the differences between master trusts and GPPs, and we expect that employers aren’t choosing their pensions arrangements based on how TUPE may apply, yet those who select a GPP would better protect their employees’ pension arrangements if there were to be a TUPE transfer.

We wonder if this disparity in treatment for DC benefits is still appropriate in light of these developments.

Early retirement and redundancy benefits (also known “Beckmann benefits”)

TUPE excludes from the scope of the pensions exception any provisions of an occupational pension scheme that do not relate to benefits for old age, invalidity or survivors, ie any such benefits do transfer to the receiving employer under TUPE.

Case law[6] has held that the following rights are not old age, invalidity or survivors’ benefits and therefore transfer under TUPE:

  • early retirement benefits contingent upon dismissal (on the grant of early retirement by agreement with the employer), and
  • benefits intended to enhance the conditions of such retirement, paid in the event of early retirement arising by agreement between the employer and the employee to employees who have reached a certain age.

However, there are numerous practical difficulties in implementing these decisions, including:

  • valuing the benefits – if the parties decide to include a price adjustment, how should this be valued?
  • discretionary benefits – although Procter & Gambleconfirms that a right to be considered for a discretionary benefit is transferrable, the case offers little guidance on how this would work in practice. How will the buyer make this decision? Do any constraints apply?
  • providing the benefits in practice – there is some uncertainty as to what exactly transfers and how it should be funded/provided in practice, given that the old age benefit associated with the transferring benefit does not transfer. This is partly because the transferring benefit will generally not be capable of being paid from a registered pension scheme without incurring potentially significant adverse tax consequences.

As you can see, there is a lot of uncertainty around exactly what the benefits are and how they should be provided, which causes a lot of difficulty for purchasers in both (i) negotiating with the seller but also (ii) how to deliver the benefit in practice.  If the Government decides to keep these benefits in scope of TUPE, then it would be helpful if it could clarify exactly which benefits are in scope, and provide guidance as to how to provide these benefits in practice.

Complex and overlapping legislation

When sellers and purchasers are considering pensions obligations as part of a TUPE transaction, the current legal requirements are a complex lattice of legislation and case law. As well as TUPE, they need to consider:

  • the listed change consultation requirements (see answer to Question 3)
  • occupational pension scheme protections in the Pensions Act 2004 and underlying regulations (see answer to Question 5)
  • relevant case law for early retirement and redundancy benefits (see above)
  • automatic enrolment requirements (Pensions Act 2008 and underlying regulations).

Whilst this call for evidence is only on TUPE, we wonder if there is any scope for consolidating these requirements in the future?  However, we are aware that this may be difficult in practice, given some of the requirements are in primary legislation but TUPE is only secondary legislation.

[1] Sections 259 to 261 of the Pensions Act 2004, the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (SI 2006/349) (the “Consultation Regulations”) and the Occupational Pension Schemes (Consultation by Employers) (Modification for Multi-employer Schemes) Regulations 2006 (SI 2006/16)

[2] Regulation 15(4) of the Consultation Regulations

[3] Regulation 13 of TUPE

[4] Regulation 10 of TUPE

[5] Sections 257 and 258 of the Pensions Act 2004 and the Transfer of Employment (Pension Protection) Regulations 2005 (SI 2005/649)

[6] Beckmann v Dynamco Whicheloe Macfarlane Ltd [2002] IRLR 578 (ECJ); Martin v South Bank University [2004] IRLR 74 (ECJ); The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget (SCA) and another [2012] EWHC 1257 (Ch); [2012] IRLR 733 (High Court)