Chattertons Solicitors Banner Image
News and Events

Who is protected if your employer transfers over to another business?

View profile for Leanne Day
  • Posted
  • Author

What is TUPE (Transfer of Undertakings)?

The purpose of TUPE is to protect employees in the event that the business they work for transfers over to someone else. It means that the employees' terms, entitlements and rights remain the same with the new employer. But, who is covered under the term 'employees'?

Regulation 2 states that an "employee means any 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." According to the recent ruling in Dewhurst, this should be interpreted to include limb b workers, i.e. workers who fall under the definition of section 230(3)(b) Employment Right Act 1996. This includes where there is either an express or implied contract, made verbally or in writing, where the individual carries out work or services personally for another party to the contract.

'Workers' can transfer under TUPE, rules London Employment Tribunal:

In the recent case of Dewhurst v Revisecatch Limited & CitySprint, the Employment Tribunal found in favour of the claimants when they argued that limb 'b' workers should fall with the definition of 'employee' under Regulation 2 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE").

In this case, the workers were cycle couriers whose contracts swapped from CitySprint to Revisecatch. They claimed holiday pay, compensation under the Working Time Regulations and failure to inform and consult under Regulations 13 and 14 of TUPE.  At a preliminary hearing, Employment Judge Joffe had to decide whether, as a matter of law, workers were to be interpreted as employees under TUPE before the claims could be considered and determined.

The starting point when interpreting TUPE is the Acquired Rights Directive. This states that 'employees' include anyone defined as an employee by the Member State's domestic law. At paragraph 56 of his judgment, Employment Judge Joffe stated "...the Acquired Rights Directive is properly to be read as embracing this class of working person." He goes on to say at paragraph 60, considering national law, that "I can properly give effect to the Acquired Rights Directive by concluding that the words 'or otherwise' [Reg 2(1) TUPE] are to be construed so as to embrace limb b workers."

This decision is not currently binding on other Employment Tribunals. However, if the decision is appealed and upheld in the Employment Appeal Tribunal, then it will set a precedent and Employment Tribunals will have to follow the ruling in future cases. This would have a significant impact on transferring businesses and would mean further employee liability disclosure was required and workers would need to be informed and consulted throughout any TUPE process.  Failing to comply with these obligations could result in claims being made to the Employment Tribunal and compensation of up to 13 weeks' pay awarded to each employee affected (Regulation 16(3)).