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The Definition of ‘Employee’ in TUPE Includes Workers, not just Employees

This was the recent, and controversial, decision of Employment Judge Joffe in Dewhurst v Revisecatch & City Sprint at a preliminary hearing in the London Central Employment Tribunal.

Before delving into the specifics, it is worth noting that decisions of first-tier Tribunals like this one are not binding on others and we consider that it is likely that the decision here may well be the subject of an appeal.

The judge here was asked to consider whether certain workers fell within the definition of an “employee” under the Transfer of Undertakings (Protection of Employment) Regulations 2006.  This legislation is often more commonly referred to as TUPE.  Whether someone is an “employee” or not for TUPE purposes is important because it could make the difference between that individual and their employment terms transferring to another employer or not.  Employees also receive additional protection under the TUPE legislation.  Read on to find out what the judge decided in this case and what the resulting implications are!

Background

This case involves three claimants (Dewhurst, Marchant and McQuade) who were all cycle couriers and two respondents (Revisecatch Limited t/a Ecourier and City Sprint (UK) Ltd).

In January 2018, City Sprint lost a contract to provide courier services to HCA Healthcare to another business, Ecourier.  The claimants were engaged by City Sprint until 31 January 2018, following which their services were engaged by Ecourier. The claimants brought various claims against the respondents, including an alleged failure to inform and consult under TUPE (which they could only pursue as a claim if they fell within the definition of an employee under TUPE). The claimants were engaged under contracts for services and not a traditional contract of employment, which meant there was a preliminary issue as to whether they were employees under TUPE or not.

More specifically, the matter to be dealt with at the preliminary hearing was: “whether what are often referred to…as ‘limb b) workers’ (ie those who fall within the definition of worker found in Employment Rights Act (ERA) 1996 s 230(3)(b) and in other legislation such as the Working Time Regulations (WTR) 1998) as a matter of law fall within the definition of ‘employee’ in reg 2 (1) of TUPE 2006 so as to benefit from the rights and protections conferred by TUPE 2006.”

For the purposes of this preliminary hearing, the second respondent (City Sprint) did not make any submissions. No evidence was heard in this matter or agreed facts relied on: the decision was based on submissions and skeleton arguments from the claimants and the first respondent (Ecourier) only.

Judge Joffe’s Findings

In the reserved judgment, it is noted by Judge Joffe that our domestic law is somewhat inconsistent in its categorisation of ‘workers’ and ‘employees’. The ERA and the WTR adopt the same definition of ‘employee’ as those having a contract of service (the traditional definition) and individuals who fall within this traditional definition benefit from certain enhanced employment rights. However the Equality Act 2010’s definition of ‘employee’ is wider and encompasses those who would be identified as ‘workers’ under the ERA and WTR. Those included in the latter definition still enjoy some employment rights, such as the right not to be subject to discrimination and the right to equal pay and annual leave but do not have the same level of protection as employees who satisfy the traditional definition.

Judge Joffe referred to the European directive which our TUPE legislation seeks to implement here in the UK (known as the Acquired Rights Directive (ARD)) and confirmed that our TUPE legislation must be interpreted in a liberal manner.

When considering the wording of TUPE, it was held that the definition within the legislation of an ‘employee’ as “an individual…under a contract of employment or apprenticeship or otherwise’, was intended to include a ‘broader class of employees’. The ARD acts as a safeguard on the rights of employees in the event of a change of employer and member states do not have an ‘unfettered discretion’ in defining matters such as the ‘employment relationship’ or ‘employment contract’.

In particular, Judge Joffe found it difficult to see how a group of workers, who are protected from discrimination under domestic legislation, would not also be entitled to the transfer under TUPE and to receive protection where their EU derived employment rights were breached. 

It was determined that, although under current UK employment law, limb b) workers and traditional employees are afforded different levels of protection, they should both be afforded some protection and preservation of rights under TUPE.

Despite the apparent controversy of this decision, the Judge considered that such an interpretation of the term ‘worker’ does not ‘go against the grain of TUPE 2006’ as the very purpose of TUPE is to protect the rights of those who work within an undertaking when such an undertaking is transferred. The Judge held that the words ‘or otherwise’ in the TUPE legislation were to be “construed so as to embrace limb b) workers / Equality Act employees”.

This decision is not likely to be welcomed by employers, because it widens those potentially in scope of the TUPE provisions.  On a practical level, many businesses proceed on the basis that only traditional employees fall within the scope of TUPE and that it does not include other workers.  It will be interesting to see how matters develop after this decision and if it is appealed or not. 

As mentioned earlier, the tribunal decision is not binding on other tribunals (which can still take a different view).  Businesses may now wish to seek legal advice to understand which approach to adopt when dealing with a TUPE transfer, given this decision has created some uncertainty.  In addition, they should continue to watch this space to see if any further clarity is provided from the courts and if the tribunal decision is appealed. 

This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as legal advice.

JMW Solicitors is a Limited Liability Partnership.

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