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TUPE and Worker Status: It was only a matter of time!

06/12/2019

Lodders employment law specialist, Jennifer Linford, examines a recent case which has potential effects on the ambit and scope of TUPE.

Background

In the UK there are three main categories of employment status, ranging from: employee, worker, and self-employed, each category being afforded differing degrees of employment law rights and protection.

It is well established that only those who are classed as employees are afforded protection under the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014, hereby referred to as TUPE.

Under regulation 2(1) of TUPE, an employee is defined as someone who “works for another person, whether under a contract of service or apprenticeship or otherwise”. It is worth noting at this juncture, that this definition is much broader than the definition of ‘employee’ as prescribed by section 230(1) of the Employment Rights Act 1996 (ERA).

The dispute

In the recent case of Dewhurst v Revise Catch and City Sprint (Dewhurts), the dispute between the parties centred on whether the employer’s obligations to ‘inform and consult’ with affected employees (under regulation 14 of TUPE) should extend to workers, or whether it should be limited to employees (as defined under section 230(1) ERA). There was also a claim for holiday pay, which was dependant on the individual’s holiday pay rights transferring across to the new employer, under TUPE.

In deciding the Dewhurts case, an employment judge, sitting in London Central Employment Tribunal, determined that workers, as well as employees, were entitled to benefit from protection under TUPE.  The judge decided that the words “or otherwise” were wide enough to bring a worker within the definition of an employee, as contained in regulation 2(1) of TUPE (as above).

At present, this decision is not binding. However, it is likely to be highly persuasive, particularly when presented against the backdrop of recent GIG economy cases, most of which have afforded workers with a greater degree of employment law protection and rights, more akin to those which have historically been reserved to employees.

Wide-reaching ramifications

The Dewhurts case has the potential to have wide-reaching ramifications on how the transfer of a business takes place, and who transfers with it. It is, at present, and in my opinion, unlikely to require any immediate change in approach or tactics.  However, it would be foolish to ignore the overriding possibility that the approach adopted in Dewhurts will become binding, especially when you pay heed to the penalty of 13 weeks’ pay per employee, for failure to comply with regulation 14 of TUPE.

In the event that the Dewhurts decision is elevated to a binding principle of law, the impact will extend the ambit and scope of TUPE and it will, as a result, have a significant bearing on the commercial decisions related to the buying and/or selling of a business, and the costs (and legal costs) associated with such transactions. Therefore, in my opinion, those involved in such commercial transactions will be well advised to ensure that appropriate warranties and indemnities covering not only employees, but also workers, are negotiated into any such sale/purchase contract.

Change is most definitely on the horizon. Watch this space.

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For more information on the Lodders Employment Team, please contact Nick Rowe on 01242 229096, or via email.