TUPE: Covers workers as well as employees

The recent case of Dewhurst v Revisecatch Limited t/a Ecourier and City Sprint (UK) Limited, determines that definition of “employee” under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is different to the standard definition of employment law, for example, for unfair dismissal and redundancy.

Facts

In Dewhurst v Revisecatch and City Sprint, the three claimants were cycle couriers engaged on a non-employed basis i.e. were not employees.  The individuals brought claims at the employment tribunal asserting entitlement to holiday pay under the Working Time Regulations 1998 and failure to inform and consult under regulations 13 and 14 TUPE. The claimants were engaged by City Sprint as couriers until 31 January 2018 when City Sprint lost its contract to provide courier services to HCA Healthcare to Ecourier. The individuals were then engaged by Ecourier.

Legal Issues

Under regulation 2 of TUPE, an employee means “any individual who works for another individual under a contract of service or apprenticeship or otherwise but does not include anyone who provides services under a contract for services.”

We normally need to consider three main categories of employment status: employees, workers, and the self-employed. Self-employed individual has no employment rights whereas employees have the full spectrum of employment protection.

Then there is a category of ‘workers’ who are entitled to some employment rights notably the minimum/living wage, entitlements from the Working Time Regulations, in particular, holiday pay and rest breaks, protection from detriment for whistle-blowing and discrimination and pension auto-enrolment.

The definition of worker is set out in s.203(3)(b) Employment Rights Act 1996 (ERA) and other legislation, such as the Working Time Regulations 1998.

The issue in the Dewhurst case workers” fall within the definition of employee in regulation 2 of TUPE and benefitted from the rights and protections conferred by TUPE. This is often very relevant in today’s modern gig economy and increasingly we are seeing individuals assert employment rights where the ‘employer’ might consider the individuals to be self-employed.

The tribunal found that these workers were included in the “employment relationship” in the context of TUPE and its parent EU legislation, the Acquired Rights Directive.

The employment tribunal also considered the provisions in regulation 2(1) of TUPE that exclude individuals from protection who provide services under “contracts for services”. The tribunal held that the exclusion only applied to ors genuinely in business on their own account and does not exclude workers.

Comment

Firstly, though well-reasoned, this is only an employment tribunal judgement and not binding on other tribunals. There are no appellate decisions on point, but until there is a contrary appeal decision, other individuals will no doubt run similar arguments. Employers failing to include workers in TUPE transfers may have significant employment risks and liabilities not least the award of up to 13 weeks’ pay for failing to inform and consult. Multiplied by a number of employees these awards can be significant. In advance of any appeal, businesses will need to review carefully what individuals are engaged in any business sale or service provision change where TUPE is likely to apply and plan accordingly to ensure liabilities are minimised. We anticipate that either this case or a future case will be appealed and hopefully there will be greater clarity once this issue is considered by either the Employment Appeals Tribunal/ the Higher Courts.