The termination of a lease by surrender or forfeiture may trigger a TUPE transfer with significant implications for all parties involved. This article explores when TUPE could apply in such circumstances and offers practical guidance for employers.

Published 23 December 2025

Surrender or forfeiture of a lease

A lease may be surrendered when a tenant and landlord agree to end the lease earlier than originally planned. Forfeiture of a lease is when the lease is terminated by the landlord, usually because the tenant has acted in breach of the lease.

However the lease is terminated, tenants with employees will need to consider the implications on its workforce.  Depending on the circumstances, it is possible that employees could transfer to the landlord or a new tenant under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

When might TUPE apply?

TUPE could apply where a lease is terminated by surrender or forfeiture, and the landlord either:

i)              assumes the activities at the property; or

ii)             grants a new lease to another tenant to continue those activities.

In the first scenario, employees of the outgoing tenant (the transferor) engaged at, or providing services to, the property may transfer under TUPE to the landlord (the transferee in this scenario).

In the second scenario, they may transfer under TUPE to the new tenant (the transferee in this scenario).

Assessing whether TUPE applies

The termination of a lease by surrender or forfeiture may trigger the application of TUPE either as a business transfer or as a service provision change. As such, it is important to consider both limbs of TUPE to determine whether or not it does apply.

A business transfer is a transfer of a business or part of a business to another party and where that business is an ‘economic entity’ that retains its identity. As a simplified example, if a convenience store which sold groceries and day-to-day cleaning products was replaced with another similar convenience store selling the same or similar products, although the branding of that store might change – it would still be identifiable as a convenience store. On the face of it, that could mean that there has been a business transfer and TUPE does apply.

In the case of surrender or forfeiture of a lease, this might apply where the landlord leases a property to a company operating a restaurant. The lease is terminated, and the landlord grants a lease to a new tenant to carry out the same or similar business.

A service provision change is a transfer of services where such services might be outsourced, transferred to another service provider or taken in-house. This might apply in cases where the landlord of a multi-let office building changes its cleaning contractors. The termination of a lease could result in the termination or change of certain services, such as any security or cleaning services that are supplied in connection to that lease, so this could still apply.

For service provision changes, TUPE will not apply if the identity of the client receiving those services changes. It can often be difficult to identity the relevant client, particularly in multi-let properties. In such cases, it could be the landlord or one or more of the tenants who are the client, so further analysis would be required.

What are the consequences if TUPE does apply?

• automatic transfer of employees: Those employees ‘assigned to the organised grouping’ will become employees of the transferee on the same terms and conditions, except for limited exceptions such as certain pension benefits. This includes all rights, duties and liabilities that attach to those employees (such as any ongoing claims that they might have against their employer)
• obligations to inform and consult: Both parties will have obligations to inform and consult those affected employees and, in the case of the transferor, to provide employee liability information
• exclusion of TUPE: It is not possible to contract out of TUPE, though indemnities between parties are permitted and may form part of the negotiations in leases or services agreements

Practical takeaways for employers

• assess TUPE risk early: Determine whether activities will continue following termination and whether employees are assigned to those activities
• plan for consultation: Ensure compliance with TUPE obligations to inform and, where required, consult affected employees in good time
• review contractual protections: Consider including indemnities in any future leases to address potential employment liabilities arising from TUPE as a result of surrender
• obtain employee information: Landlords should require tenants to provide anonymised employee information in advance of lease termination so that any costs and/or risks of TUPE can be properly assessed
• check service arrangements: Where services are outsourced or insourced, assess whether TUPE applies to staff engaged in cleaning, security or maintenance services carried out in the property