NEC ECC: Contract Z clause concerning TUPE - what is this?

We have a contract that has introduced clauses about TUPE. In very simple terms – what is TUPE and how would this affect a Contractor in their administration of a contract? I understand it is something to do with staff.

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TUPE is a reference to legislation, primarily;

The Transfer of Undertakings (Protection of Employment) Regulations 2006,

which is amended by the;

Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014).

Essentially these regulations apply in circumstances where;

A business is tranferred to new ownership

TUPE Regulations apply where a business, or part, is bought or sold, where the business subsequently continues to trade in the same way after the transfer. Exceptions are where just shares, assets or equipment is changing ownership.


Provision of services is changed.

The TUPE Regulations apply where;

  • a client outsources to a contractor,
  • a new contractor takes over service provision from another contractor,
  • a client takes outsourced activities back in-house.

There are certain provisions that need to apply but the activities carried out must be ‘fundamentally the same’ before and after for TUPE to apply.

Essentially TUPE means that an incoming Employer, or transferee, must retain existing employees under the same terms and conditions of contract, except where changes are made for ‘economic, technical or organisational’ reasons, which may include a change in the workplace location. Any such change, however, must be made as a ‘valid business reason’.

From an NEC perspective you may be tendering for services, say under a TSC form, which requires the preferred bidder to ‘take over’ the existing employees under a TUPE agreement.

As a business you need to understand the potential impact of TUPE and the responsibilities and liabilities this creates. It could be that the Z clauses are pure legal boilerplate and serve no real purpose in your contract. Given it’s an ECC for a project it would be unusual for your staff to transfer - the undertaking is the project. An exception might be in the event of termination of a large / long term project where you have staff employed specifically for the project. Too many ifs, buts and maybes to advise further other than to say you should speak to an employment lawyer in the first instance if you are unsure what this means for your business.