Case law: TUPE rules may protect ‘workers’ as well as employees

Businesses involved in a ‘service provision change’ under TUPE, such as where a client replaces one contractor with another, should consider whether workers – as well as employees from the first contractor - are protected by the TUPE rules, so that the second contractor must take them on and preserve their existing employment rights.

An Employment Tribunal (ET) has decided that the TUPE rules apply to ‘workers’ as well as employees so that, for example, individuals employed in the gig economy as workers may also be protected by TUPE.

The TUPE rules are designed to protect employees in certain circumstances – by preserving their jobs and their terms and conditions of employment. For example, the TUPE rules provide protection for employees when there is a ‘service provision change’, such as when a client re-assigns a contract from an existing contractor to a new one.

The protections include the ability to carry over holiday entitlement to the new contractor, and an entitlement to be informed and consulted about the changes.

The workers in question were bike couriers working for a delivery company. It was agreed they were merely ‘workers’ and not full employees. The delivery company had a contract to carry out deliveries for a client but lost the contract to a rival, resulting in a service provision change for TUPE purposes. The rival engaged the bike couriers to carry on making deliveries for the client.

The couriers claimed that even though they were not employees, the TUPE rules also protected them so that their entitlement to outstanding holiday pay should be taken on by the new contractor. They also claimed they had not been informed and consulted about the changes as required under the TUPE rules.

The new contractor argued that the TUPE rules only protected employees. As the couriers were not employees but merely ‘workers’, they were not protected.

The TUPE rules say an employee is “an individual 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...”.

The ET ruled that the use of the words “or otherwise” must mean the rules apply beyond full employees – they must also therefore apply to ‘workers’.

It also took into account that the TUPE rules should follow the EU Directive from which they are derived, which says that protection is intended to cover the “rights and obligations arising from a contract of employment or employment relationship”; and found that the words “employment relationship” could include workers - not just employees.

ET decisions are not binding on other courts and tribunals, but if the ruling is upheld on appeal this will have significant implications for employers.

Operative date

• Now

Recommendation

• Businesses involved in a ‘service provision change’ under the TUPE rules, such as where a client replaces one contractor with another, should consider whether workers from the first contractor who are taken on by the replacement contractor are protected by those rules, as well as employees.

Case ref: Dewhurst v Revisecatch Ltd and CitySprint Case numbers 2201909, 2201910 and 2201911/2018