Does TUPE apply to workers?

The generally accepted answer to this is no. However, an employment tribunal has found that workers, as well as employees, transfer under TUPE. This is only a tribunal decision and so is not binding. Nevertheless, it is an interesting point with potentially huge implications for employers should it be confirmed by a higher court.

Facts of the case

In Dewhurst v Revisecatch Ltd t/a Ecourier and CitySprint (UK) Ltd (November 2019) the tribunal was asked whether three bike couriers were protected, and had transferred, under the Transfer of Undertakings (Protection of Employment) Regulations 2006. They had all worked for CitySprint until January 2018 when CitySprint lost a contract. The contract was awarded to Revisecatch, which engaged the claimants from February 2018.

The claimants alleged that outstanding holiday pay liability had transferred to Revisecatch under TUPE; and also that there had been a failure to inform and consult. For the claims to succeed, they had to demonstrate that they were 'employees' under TUPE.

Definitions of employee and worker

Somewhat confusingly, the various pieces of relevant employment legislation do not use the same definitions of 'employee' and 'worker':

• The TUPE Regulations define an employee as any individual who works for another person whether under a contract of service or apprenticeship or otherwise but does not include anyone who provides services under a contract for services.
• The Acquired Rights Directive (the EU law which the TUPE Regulations derive from) provides for the transfer of rights and obligations arising from an employment contract or employment relationship.
• In terms of the Employment Rights Act 1996 an employee is an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. Workers, in addition to employees, include anyone who undertakes to perform services personally for a third party, which is not a client or customer of a profession or business undertaking operated by them ('limb (b) workers').

Tribunal decision

The employment tribunal focused on the words 'or otherwise' in the TUPE Regulations, and the reference to 'employment relationship' in the Directive. The judge ruled that the words 'or otherwise' extended the definition of employee under TUPE and conferred rights on a broader class of individuals than just those employed in terms of a contract of employment. The definition of employee in this context is wide enough to include 'limb b workers'. The only individuals who are excluded from the application of TUPE are independent contractors genuinely in business on their own account.

Potential implications

If this decision was to be confirmed by a higher court, there are potentially significant implications:

• Workers (as well as employees) would automatically transfer from the seller to the purchaser on their existing terms and conditions (with limited exceptions), and changes to these might be void.
  
• Workers would need to be included in the due diligence process; as part of the employee liability information provided to the purchaser; and when negotiating warranties and indemnities.
  
• Employers would need to inform and consult with appropriate representatives of both employees and workers affected by a TUPE transfer. Failure to do so could result in a protective award of up to 13 weeks' pay for each individual.

Workers transferring under TUPE who don't meet the definition of an employee under the Employment Rights Act 1996 would not, however, have a right to claim unfair dismissal or statutory redundancy pay.

The potential extension of the application of the TUPE Regulations is certainly one to watch out for. A worker was previously found to be protected under TUPE in a 2013 employment tribunal decision, yet this did not lead to a widespread change in approach. We'll keep you updated.