A case was decided this week in the London Central Employment Tribunal (Dewhurst v Revisecatch) which has dramatic ramifications for employers. The Tribunal’s decision is that, where there is a transfer covered by the Transfer Regulations, individuals who are properly classified as “workers” are covered by the Transfer Regulations.

The Transfer Regulations apply to anyone working as an “employee”. This is defined in the Regulations as someone who “works for another person, whether under a contract of service or apprenticeship or otherwise (emphasis added), but does not include anyone who provides services under a contract for services, and references to a person’s employer shall be construed accordingly”. In other words, someone who is clearly an employee is covered by TUPE because they work under a contract of service. However, what do the underlined words “or otherwise” mean? There is a clear exclusion if you are genuinely self-employed (i.e. engaged in business on your own account), then you are not covered by TUPE. What happens if you are neither working under a contract of service, nor are you working under a contract for services? In other words, what happens if you are somewhere between those two extremes?

In this case, individuals who were cycle couriers claimed that they were “workers” and they should be treated as working under a contract of employment for the purposes of TUPE. Their argument was that clearly TUPE applied to contracts of employment plus a further category (“or otherwise”).

Under English law, there are, in essence, three categories of individual: employee, worker and the genuinely self-employed. The worker category is an intermediary category which, broadly speaking, means that an individual is contracted directly to the end user/employer, and they are not genuinely in business on their own account.

The Tribunal decided, after a careful review of the authorities, that workers were intended to be covered by the Transfer Regulations. This arose in the context of a claim for a failure to consult with those workers’ representatives ahead of the TUPE transfer. Furthermore, there was a claim for holiday pay which was dependant on the individual’s prior holiday pay rights transferring across from a former employer, under the Regulations.

If correct, this case extends the ambit of TUPE significantly. Employers will have to treat workers as if they were employees for the purpose of TUPE protection. This would clearly apply in relation to collective consultation rights, and the transfer of historic contractual rights and claims over to the new employer. Transferees will need to negotiate appropriate warranties and indemnities to cover workers as well as employees. This case does not give workers the right to claim automatic unfair dismissal, because that part of TUPE regulations refers back to the definition of “employee” in the Employment Rights Act 1996, which excludes workers. However, it is probably only a matter of time before someone argues that it is necessary to interpret the UK legislation to give workers dismissed following a TUPE transfer the right to claim automatic unfair dismissal.

Please remember that this is an Employment Tribunal decision. As such, it does not create a binding precedent. This case will be appealed, or one of the cases coming along in its wake will be appealed. However, for now, it is necessary for employers to think about how they are going to handle collective consultation and the allocation of risk in any TUPE transfer. For those interested, we will discuss this case further in our next employment podcast.

 

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