TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. It means that when a UK service contract changes hands, the staff who currently deliver that service transfer to the new supplier on the same terms. Same pay. Same hours. Same accrued holiday. Same protected service length. For a UK soft FM bidder, TUPE is the single biggest pricing risk in any retender.
- TUPE applies when there is a 'service provision change' between two suppliers, or between a buyer and a supplier (insourcing or outsourcing).
- Staff transfer on the same pay, hours, holiday entitlement and length of service. Pension may transfer with limits.
- The buyer must publish a TUPE schedule (anonymised) in the tender pack. Price your labour against this, not your existing pay rates.
- National Living Wage rose to £12.71 per hour from 1 April 2026 (up 4.1% from £12.21). Most TUPE-transferring soft FM staff are at or close to NLW, so the rise is your floor.
- Recent UK case law in early 2026 (Alpha Anne v GOSH, EAT) reinforced the pay-disparity risk where insourced cleaning staff sit alongside in-house workers on different terms.
- Most failed bids that win and lose money fail because the bidder priced against their own rates, not the TUPE schedule.
What's in this guide¶
- What TUPE is and when it applies
- What transfers (and what does not)
- The TUPE schedule in a tender pack
- How to price TUPE-transferred staff
- The impact of National Living Wage from April 2026
- Recent case law and what it means
- Common TUPE pricing mistakes
- Pre-bid TUPE checklist
What TUPE is and when it applies¶
TUPE protects employees when the business they work for changes hands. The relevant trigger for soft FM is a 'service provision change'. That means an activity that was being delivered by one organisation gets transferred to another. The cleaning contract that was with Mitie moves to your firm, or vice versa. The catering team that was in-house gets outsourced. Or work that was outsourced comes back in-house.
| Scenario | TUPE applies? | Notes |
|---|---|---|
| Council retenders cleaning, you win against the incumbent | Yes | Service provision change. Incumbent's staff transfer to you. |
| First-time outsourcing of catering by an MAT | Yes | In-house staff transfer to the winning supplier. |
| Council insources grounds maintenance back in-house | Yes | Outsourced staff transfer to the council. |
| Wholly new contract with new sites and no incumbent staff | No | Genuine new work. No-one is delivering it now, so no-one to transfer. |
| One-off deep clean with no continuing service | No | Single short-term task, not a service provision change. |
When TUPE applies in soft FM tendering.
Two more conditions to watch. The transferring activity must be the same activity (cleaning is cleaning, catering is catering — TUPE is unlikely if the new contract changes scope materially). And the staff must be 'assigned' to that activity, meaning they spend most of their working time on it.
What transfers (and what doesn't)¶
| Element | Transfers? | Notes |
|---|---|---|
| Pay rate | Yes | Same hourly or salary rate. Pay rises previously contracted (NLW rises) also follow. |
| Hours and shift pattern | Yes | Including overtime arrangements and unsocial-hours premiums. |
| Holiday entitlement and accrued leave | Yes | Statutory minimum is 5.6 weeks (28 days for full-timers). Many TUPE staff have more from years of service. |
| Length of service (continuity) | Yes | Affects redundancy, notice periods, sick-pay accrual. |
| Sick pay schemes | Yes | Including any contractual enhanced sick pay. |
| Occupational pension | Partly | Defined-contribution pensions transfer. Some defined-benefit elements have specific TUPE rules. |
| Equipment and uniforms | Sometimes | Depends on the asset register in the tender pack. Specialist kit often does not. |
| Bonus schemes | Yes if contractual | Discretionary bonuses are harder to enforce, but contractual ones transfer. |
| Trade union recognition | Yes | Existing collective agreements continue. |
| Disciplinary records | Yes | Live disciplinary processes transfer with the employee. |
What follows the employee under TUPE, and what doesn't.
What does not transfer. Insurance policies. The outgoing supplier's H&S management system. Their internal processes. Any equipment not specifically listed in the asset register. The trade names or branding of the outgoing supplier. Their relationships with sub-contractors (those need fresh agreements with you).
The TUPE schedule in a tender pack¶
Every UK public-sector tender for a service that has an incumbent must include a TUPE schedule. It lists the staff who would transfer, anonymised by job role rather than name. The schedule is the single most important pricing input in your bid.
What the TUPE schedule contains.
- Job role and number of staff in each role
- Hourly or salary rate for each role
- Contracted hours per week
- Holiday entitlement (often above the 5.6-week minimum)
- Length of continuous service (affects redundancy and notice)
- Pension status and contribution rates
- Sick-pay scheme details
- Any contractual bonuses or premiums
- Trade union memberships where collective bargaining applies
The TUPE schedule sits alongside the rest of the tender pack documents. For an overview of what else is in the pack, see what are tender documents and which ones really matter for FM contracts.
How to price TUPE-transferred staff¶
Pricing rule one. Use the TUPE schedule rates, not your own. If the schedule says a cleaner is on £13.10 an hour, you price your bid at £13.10 plus on-costs. Not at NLW. Not at your existing rate. The schedule is what you will be paying once those staff transfer.
Pricing rule two. Add every on-cost. Hourly pay is just the start.
| On-cost | Rate | Notes |
|---|---|---|
| National Living Wage (floor) | £12.71 per hour from 1 April 2026 | Up 4.1% from £12.21. Apply to anyone aged 21+. Lower bands for under-21s. |
| Employer National Insurance | 15% from April 2025 | Up from 13.8%. Applied above the secondary threshold (£5,000 from April 2025). |
| Pension auto-enrolment | 3% minimum employer contribution | Plus 5% employee. Some TUPE staff have higher contractual rates. |
| Holiday pay | 12.07% of hours worked | Equivalent of 5.6 weeks' annual leave for a full-time worker. More if the TUPE schedule shows enhanced entitlement. |
| Sick pay provision | Variable | Statutory Sick Pay rate plus any contractual enhancement on the TUPE schedule. |
| Apprenticeship Levy | 0.5% of payroll over £3m | Applies to larger employers only. |
| Supervision and management overhead | 8 to 15% typically | Site supervisor cost, area manager allocation, payroll, HR admin. |
| Equipment, materials, consumables | Variable | Cleaning chemicals, security uniforms, grounds equipment, waste collection vehicles. |
| Margin | 8 to 15% typically | Net profit after all the above. Public-sector tenders rarely sustain higher margins. |
On-costs to add to TUPE-transferred staff base pay.
A worked example. A cleaning contract has 10 transferring cleaners on £13.10 an hour, 30 hours a week. Base pay = 10 × 30 × £13.10 = £3,930 a week. Add Employer NI at 15% above the threshold, holiday pay at 12.07%, pension at 3%. That is roughly another 22% on the wage bill, taking £3,930 to about £4,795 just for direct labour. Then add supervision, kit, and margin to land your weekly bid price.
National Living Wage from April 2026¶
The NLW rose to £12.71 an hour from 1 April 2026. Up 4.1% from £12.21. For TUPE-transferred soft FM staff, this matters in two ways.
- Anyone on the TUPE schedule below £12.71 must be brought up to £12.71 on the new contract. The increase is your cost. Recoverable through annual price review only if the contract has a pay-indexed clause.
- If the TUPE schedule shows staff above £12.71, that higher rate transfers and stays. You cannot drop them to NLW just because the contract started fresh.
Read the contract's pay-indexation clause carefully. Most public-sector soft FM contracts now allow annual review against NLW changes. If yours does not, you absorb the rise every April. Bid that into your margin from day one.
Recent case law: pay disparity risk¶
Recent Employment Appeal Tribunal case law in early 2026 (Alpha Anne v GOSH, February 2026) reinforced a long-standing risk for outsourced and insourced soft FM. Where transferred staff sit alongside in-house workers doing the same job, pay disparities can become an equal-pay claim risk. The case concerned cleaning staff at Great Ormond Street Hospital and the principle applies across UK public-sector cleaning, catering and security.
What this means for a soft FM bidder. If you transfer staff into a contract that already has in-house workers on the same site doing similar work at higher pay, you carry an equal-pay risk. Two practical responses. First, raise it as a clarification question during the bid window so you understand the workforce at the site. Second, build the cost of potential equalisation into your margin or flag it as a contract risk with the buyer.
Common TUPE pricing mistakes¶
- Pricing your existing rates instead of TUPE schedule rates. The most common mistake. You will be paying schedule rates from day one, so price them.
- Forgetting holiday entitlement above 5.6 weeks. TUPE staff with 10 years' service often have 6 to 7 weeks of holiday. That is real labour cost.
- Missing protected pension contributions. Defined-contribution schemes transfer. Higher employer contributions you weren't expecting hit your margin.
- Assuming you can drop terms after a 'reasonable period'. You cannot harmonise downwards. Any reduction in pay or terms after TUPE is voidable as 'sole or principal reason connected to the transfer'.
- Not budgeting for the NLW April rise inside the bid period. If the contract starts in March 2026 and NLW rises 1 April, you eat the rise unless your indexation clause covers it.
- Ignoring sick-pay schemes. Contractual enhanced sick pay (e.g. 6 months full, 6 months half) is significant cost and is rarely modelled.
- Pricing 'core' staff and forgetting relief, holiday cover, supervision. The 10-cleaner team needs holiday cover and a supervisor. Add 12-18% to base hours for cover.
Pre-bid TUPE checklist¶
- Read the TUPE schedule before reading the spec. The labour cost determines whether the bid is viable.
- Total the labour cost: rate × hours × number of staff per role.
- Add Employer NI (15% above £5,000), pension (minimum 3%), holiday pay (12.07%), and any contractual enhancements shown on the schedule.
- Add supervision and management overhead (8-15% typical).
- Compare the all-in labour cost to the contract's published value. If labour alone is over 70% of the value, the contract is hard to make money on without scope flex.
- Check the indexation clause in the draft contract. If NLW rises are recoverable annually, carry less risk. If not, factor in 4-5% labour inflation a year.
- Submit clarification questions on anything ambiguous on the TUPE schedule. Pension status, sick-pay scheme details, length-of-service distribution.
- If transferred staff would sit alongside in-house workers, raise pay-disparity risk as a clarification question.
For the broader compliance acronyms that come up alongside TUPE in tender packs, see the TUPE, COSHH, SIA & DBS compliance guide. For everything else in a tender pack, what are tender documents covers it.
One last thing¶
TUPE is not optional. It is statutory protection. As a bidder, your job is not to avoid TUPE costs but to price them accurately. The bidders who lose money on day one are the ones who tried to under-price the labour. The ones who win profitable contracts are the ones who priced the schedule honestly and won on quality, social value and operational excellence.
Sources
- Transfer of Undertakings (Protection of Employment) Regulations 2006 · Primary UK regulations governing service provision changes.
- Acas: TUPE transfers · Acas plain-English guidance for employees and employers.
- National Living Wage rates (gov.uk) · £12.71/hr from 1 April 2026 (21+). Lower rates for under-21s and apprentices.
- Procurement Act 2023 (legislation.gov.uk) · Public procurement framework that requires TUPE schedules in tender packs from 24 February 2025.
- HM Treasury Green Book guidance · Wider economic appraisal context, used by buyers when evaluating TUPE-impacted bids.
FAQs
Frequently asked questions
- TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. In UK soft FM, TUPE means that when a service contract changes hands (cleaning, security, grounds, waste, catering, pest control), the staff currently delivering that service transfer to the new supplier on the same pay, hours and accrued terms. The new supplier inherits both the workforce and their employment conditions.
- TUPE applies in three main soft FM situations: a contract retender where one supplier replaces another, an outsourcing where in-house staff move to a supplier, and an insourcing where outsourced staff move back to the buyer. The activity must be the same activity in essence, and the staff must be 'assigned' to that activity (spending most of their working time on it). Wholly new contracts with no incumbent staff do not trigger TUPE.
- The TUPE schedule is the anonymised list of staff who would transfer with the contract. It shows job role, number of staff per role, hourly or salary rate, contracted hours per week, holiday entitlement, length of service, pension status, sick-pay scheme details, and any contractual bonuses or premiums. It is usually published as a separate Excel or PDF file in the tender pack. Read it before the spec, because the labour cost determines whether the bid is viable.
- No. Any reduction in pay or terms after a TUPE transfer is voidable if the sole or principal reason is connected to the transfer. You cannot harmonise transferred staff down to your existing workforce's terms. The protection lasts indefinitely. Some changes are allowed if there is an 'economic, technical or organisational reason' (ETO) entailing changes in the workforce, but this is narrowly interpreted and best done with employment-law advice.
- The National Living Wage rose to £12.71 per hour from 1 April 2026, up 4.1% from £12.21. It applies to workers aged 21 and over. Younger workers and apprentices have lower statutory minimums. For TUPE bids, this is your floor: any transferring staff below £12.71 must be brought up to £12.71 from day one of the new contract, and any above £12.71 stay at their higher protected rate.
- Yes. Insourcing is a service provision change in reverse. The staff who currently deliver the cleaning under the outsourced contract transfer to the council on the same pay, hours, holiday and length-of-service terms. Recent case law (Alpha Anne v GOSH, EAT, February 2026) reinforced that pay-disparity risk arises when those transferred staff sit alongside existing in-house workers on different terms.
- Defined-contribution pension contributions transfer with the employee. The new supplier inherits the same minimum employer contribution rates. Defined-benefit pension benefits have specific TUPE rules, with limits on what transfers and what does not. For most soft FM TUPE transfers (cleaning, security, grounds), staff are on auto-enrolment defined-contribution schemes, so the employer contribution and the existing employee opt-in status carry over.
- No. TUPE is statutory. Neither the buyer nor the bidder can opt out. Some tender packs include 'TUPE may apply' wording, which is shorthand for 'we believe TUPE applies on a service provision change basis but you should make your own assessment'. Treat it as if it applies and price accordingly. The cost of getting it wrong (underpriced labour, employment tribunal claims) is far higher than over-pricing.
- It can happen. Staff resign, retire or move on between the buyer publishing the schedule and the contract starting. The buyer should issue an updated TUPE schedule if material changes occur during the bid window. Once you sign the contract, the staff list is what it is on the transfer date, not the schedule date. Build a small contingency for late changes into your bid margin.
- Submit a clarification question through the buyer's portal during the bid window. Specify what looks inconsistent (rates that look low for the role, hours that don't match the spec, holiday entitlement that seems generic). The buyer must answer all bidders publicly, anonymising the question. If the answer changes the labour cost materially, factor it into your bid. If you have signed a contract and the actual transferred staff differ significantly from the schedule, raise a contract change notice and seek legal advice.