Broadly speaking, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE) applies when there is a transfer of a business (for example where Company A buys Company B) or an outsourced service contract is reassigned or brought back in house (service provision change). Under TUPE, employees of a transferring business/service contract automatically transfer to the new owner/contractor. They are entitled to reject any less favourable terms arising from the transfer and maintain the same level of protection and rights that they had prior to the transfer. TUPE protection only applies to ‘employees’ as defined in the legislation and, absent of any binding case law on the definition of employee under TUPE, this has been taken to exclude workers (i.e. those who don’ have an employment contract but still have a contract to personally provide work other than in a self-employed capacity – see section 230(3) of the Employment Rights Act 1996).
The recent, and potentially important, decision of Dewhurst v Revisecatch & City Sprint in the Employment Tribunal may pave the way for expanding the definition of ‘employee’ under TUPE law to include workers (e.g. casual workers, agency workers).
Judge Joffe, sitting in the Central London Employment Tribunal decided that TUPE applies to ‘workers’ as well as traditional ’employees’. The Judge reasoned that under the EU Acquired Rights Directive, applied via domestic TUPE legislation, the Directive’s application to an employment relationship should be broadly interpreted. Judge Joffe decided that the definition of ’employee’ in TUPE, which is “an individual who works for another person whether under a contract of service or apprenticeship or otherwise”, should cover workers as well as employees.
The impact of the case
Decisions of the Employment Tribunal are not binding but are persuasive, and if the employer appeals and the Employment Appeal Tribunal upholds the decision this would set a precedent to which other Employment Tribunals will be bound. The impact of such a decision would be far reaching, as TUPE requires the automatic transfer of employees and their rights and it also requires transferring employers to complete various processes before the transfer can take place (such as staff consultations, mandatory data sharing). These obligations and processes can be expensive and time-consuming. The expanded definition, if it happens, would put additional pressure on transferring businesses who engage workers but would also ensure a greater level of protection for workers transferring under TUPE.