Employment status has been a topical issue in recent years, particularly with the rise in the number of people working in the gig economy. In simple terms, employees are those employed under a contract of employment, while workers are those engaged under a contract to perform work personally.
Employees receive greater rights and protections than workers, most notably, the right not to be unfairly dismissed. Workers are however protected by the discrimination legislation on the basis that the definition of an employee in the Equality Act 2010 is wider than the definition of an employee in the Employment Rights Act 1996.
The Employment Judge in the above case specifically considered that it was difficult to see how it could be compatible with the EU Directive from which TUPE is derived, “for a group of workers who are entitled to protection from discrimination not also to be entitled to have liabilities for infringement of their EU derived employment rights preserved”.
Historically, TUPE has been considered as only applying to employees, not workers. The definition of an “employee” in regulation 2(1) TUPE is “an individual who works for another person whether under a contract of service or apprenticeship or otherwise…”
The Employment Judge in this case concluded that the words “or otherwise” suggest more than just employees are to be covered and that the definition is to be interpreted liberally and should therefore be taken as including workers. The judge in fact stated that not interpreting regulation 2(1) in this way “leads to absurdity”.
The implications of this decision will reach far and wide. Businesses considering the application of TUPE on the sale or purchase of a business or on a service provision change will, if this decision stands, have to take into account any workers in the workforce as well as employees. This will create practical difficulties given that workers are often engaged on a more causal, ad hoc basis than employees. For the transferor, this means informing and consulting with workers (as well as employees) in advance of the transfer. For the transferee, this means inheriting a potentially far larger workforce than would have been the case before this decision and grappling with the different arrangements that may apply to each worker, along with the increased cost base that will come with them.
However, this is only an Employment Tribunal decision and such decisions aren’t binding. The employer has 42 days to appeal. This decision was handed down on 27 November 2019 so we should know sometime in January whether the employer has appealed. Given the ramifications of this decision, we suspect it likely that they will do so. However, if the decision is upheld on appeal, workers will transfer under TUPE. They will be protected against being dismissed because of or for a reason connected with the transfer and they will be entitled to claim a protective award where there is a failure to inform and consult. There are huge policy considerations against extending the application of TUPE to workers but as the Employment Judge pointed out in this case, in this ever changing economy where is this justification for not doing so when they are already protected by the Equality Act 2010?
If you would like any further information, please contact Hannah Boynes on 0113 280 2058 or firstname.lastname@example.org or another member of the Employment Law team.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.