The generally accepted answer to this is no. However, an employment tribunal 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 huge implications for employers should it be confirmed by a higher court or amending legislation.

When does TUPE apply? What are the key implications?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply to the transfer of a business or undertaking (or part of a business or undertaking) where there is a transfer of an economic entity that retains its identity (business transfers); or a client engaging a contractor to do work on its behalf, reassigning such a contract or bringing the work in-house (service provision changes). Under TUPE: 

  • Employees assigned to the undertaking or service being transferred transfer to the transferee on their existing terms and conditions (with limited exceptions), and changes to these may be void. 
  • All rights, duties, powers and liabilities in relation to the transferring employees' contracts pass to the transferee. 
  • There is a duty to inform employee representatives about the transfer and, where measures are proposed, consult on these.
  • Dismissals will be automatically unfair if the sole or principal reason is the transfer, unless there is an 'economic, technical or organisational reason entailing changes in the workforce'. 
  • The transferor must provide 'employee liability information' to the transferee about the transferring employees at least 28 days before the transfer date.

Facts of the case

In Dewhurst v Revisecatch Ltd t/a Ecourier and CitySprint (UK) Ltd (November 2019) the employment tribunal was asked whether three bike couriers were protected, and had transferred, under TUPE. 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. In the tribunal's view, the definition of employee in this context is wide enough to include 'limb b workers'. On this basis the only individuals who are excluded from the application of TUPE are independent contractors genuinely in business on their own account.

Potential implications

There are significant implications if workers were to be caught by TUPE:

  • Workers (as well as employees) would automatically transfer from the transferor to the transferee on their existing terms and conditions.
  • 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.

In practice

As this is only a decision at tribunal level, it is not binding on other tribunals or courts and employers are unlikely to want to change their practices. 

That said the potential extension of the application of the TUPE Regulations is one to watch out for. Although the previous government consulted on proposals to affirm that TUPE only applies to employees, the Labour government's position is less clear. The Next Steps Paper published in October 2024 states that they will "launch a call for evidence to holistically examine a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice". No specific plans have been announced yet.

If you need help with anything TUPE related, please get in contact with one of our employment solicitors. 

Workbox by Brodies, our HR and employment law site, has practical information and resources on TUPE, including example letters and checklists.

*This blog was first published on 20/3/20 and then updated on 14/3/25.

Contributor

Julie Keir

Practice Development Lawyer