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Written by Brabners LLP
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) provide protection for employees who work for a business that is sold, or who perform activities for a service that is outsourced (or insourced). Broadly, the provisions of TUPE mean that the contract of employment of relevant employees is automatically transferred to the new employer or service-provider, and their length of service and contractual benefits are preserved.
TUPE has been the subject of long standing debate in the employment sphere, with the issue of whether or not TUPE applies to ‘workers’, as well as ‘employees’ coming at the forefront of those discussions.
Employment law deems that different types of workers are entitled to different levels of protection. There are currently three categories of recognised employment status: employee, worker and the genuinely self-employed. Those individuals who have traditional ‘employee’ status are best protected in terms of their employment rights, whilst those who are not strictly employed and are considered to be ‘workers’ have some, but lower levels of protection.
On the face of it, TUPE applies to anyone working as an “employee”. TUPE defines an employee as someone 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”.
Someone who is a traditional employee falls under the protections of TUPE because they work under a contract of service.
However, the use of the words “or otherwise” in the above definition begs the question as to whether other types of individuals may be protected. There is a clear exclusion under TUPE if you are genuinely self-employed (in other words, engaged in business on your own account). However, what happens in the event that an individual falls into the rather ambiguous class of “worker”? This question is particularly relevant in the recruitment sector where many temporary staff are engaged as “workers” on contracts for services, rather than “employees”.
Previous case law suggested that TUPE protection only applies where there is a contract in place between the parties which provides for personal service. However, there has been no concrete ruling on this issue which, unsurprisingly, adds to the uncertainty and increases the debate on this very topic.
Most recently, the case of Dewhurst and others v. (1) Revisecatch Limited t/a Ecourier; and (2) City Sprint (UK) Limited considered this area of law and the decision reached in this case could have significant ramifications for recruiters.
So what happened in this case?
The case itself concerned three-cycle couriers who worked for City Sprint, providing courier services for a client called HCA Healthcare. In January 2018, City Sprint lost its contract with HCA Healthcare to a competitor, Ecourier. The cycle couriers stopped working for City Sprint and began, almost immediately, working for Ecourier. Ecourier did not consider the cycle couriers to be “employees” and therefore argued that they were not covered by TUPE.
Nevertheless, the cycle couriers brought a number of claims, including a claim for failure to inform and consult under TUPE. Essentially, the crux of their argument was that TUPE applied to contracts of employment plus a further category of “worker” (the wording “or otherwise” as discussed above).
The Employment Tribunal came to the conclusion that, through the application of the words “or otherwise”, workers were indeed intended to be covered by TUPE protection. This meant that the cycle couriers’ claim for failure to inform and consult under TUPE was allowed to proceed.
It is important to firstly take note of the fact that this is only a first instance Employment Tribunal decision, so it is not binding on other Employment Tribunals. That being said, unless and until this decision is appealed (and we expect that it will be), the decision in this case is likely to be persuasive in other cases.
In the circumstances, the cautious approach would be for businesses from now on to treat workers as if they are employees for the purposes of TUPE protection. This could mean that where, for example, one employment business loses a contract for the supply of workers to another employment business, the contracts of the relevant agency workers may be treated as automatically transferring to the incoming employment businesses. In addition, the liability for any claims which the workers may have would also transfer.
However, given the significance of this decision and the fact that it is not currently binding on other cases, businesses may wish to wait for an appeal decision before changing their practices, although they should nevertheless be aware of the risk that TUPE may be found to apply to their workers.
This bulletin is for general guidance purposes only and should not be used for any other purpose. Brabners is a Limited Liability Partnership