Does TUPE apply to workers? 

Until now we would generally have answered “no” to this question. However, last week the London Central Employment Tribunal ruled that TUPE protection extends to “workers”, and is not limited to employees. Although the decision is not binding, if the ruling is upheld on appeal it’s impact will be significant. Even before any appeal is heard, this decision is likely to “move the needle” in relation to TUPE discussions and we may see parties to commercial transactions and Trade Unions, using the decision to influence negotiations.

Facts

Dewhurst v Revisecatch Ltd and CitySprint, involved the question of whether Mx Dewhurst, and 2 other claimants (all bike couriers) were protected by TUPE. They worked for CitySprint until 31 January 2018, when Citysprint lost their contract with HCA Healthcare. The contract was awarded to ReviseCatch, who employed the claimants from 1 February 2018.

The claimants alleged that liability for outstanding holiday pay transferred to Revisecatch under TUPE and there had been a failure to inform and consult under TUPE. Therefore, the tribunal needed to determine if the couriers were caught by TUPE. The case came before Judge Joffe at a preliminary hearing where no evidence was heard, although submissions and skeleton arguments were lodged. The lead claimant in this case had previously made headlines by successfully arguing that they were a worker providing services to Citysprint in November 2016.

Ruling

The claimants accepted that they were workers under s230(3)(b) of the Employment Rights Act 1996. The judge was asked to determine whether they fell within the definition of employee within Reg 2(1) of TUPE and could therefore benefit from the protections of TUPE.

Regulation 2(1) of TUPE says the following: “Employee means 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…”

In essence, the judge ruled that the words “or otherwise” extend the definition of “employee” under TUPE to include workers. In adopting this approach, the judge based her decision on the fact that the Acquired Rights Directive (upon which TUPE is based) says that what transfers are the “rights and obligations arising from a contract of employment or employment relationship”. The judge decided that an “employment relationship” can include workers, as well as employees. Not taking this approach would be inconsistent with the recitals to the Acquired Rights Directive.

Comment

Given its importance we expect this decision to be appealed. It seems remarkable that there has been so little case law on the words “or otherwise”, since a similar definition of employee was contained in the 1981 TUPE Regulations. We are only aware of one other previous employment tribunal decision in 2013 where a worker was held to be an employee for the purpose of a TUPE transfer. Yet that case did not lead to any wider change in approach towards workers.

This case comes at a time when there is a heightened awareness of the various rights which apply to workers and this decision adds to the ongoing conversation around the rights on workers within the so-called gig economy. Workers have historically been given little attention in the context of commercial transactions (for example, in the context of HR due diligence, contractual indemnification or information/consultation on a business sale or outsourcing). This decision may become a watershed moment in this respect, although our advice would be for clients to maintain their position in relation to workers until the outcome of any appeal is known. Looking ahead, the Conservatives, Labour and Liberal Democrats manifestos all refer to extending workers’ rights to some extent, although the Labour manifesto proposes the most radical reform. While there is no specific reference to TUPE, they plan to create a single status of ‘worker’ for everyone apart from those genuinely self-employed in business on their own account. Now if that were to happen, that would truly be a watershed moment.