TUPE regulations protect the rights of ‘employees’ (as defined in TUPE) if the business they work for is sold/transferred to another owner.
TUPE also applies to outsourced services – where (i) an employer outsources a service to a third party contractor, (ii) an outsourced service moves from one provider to another, and (iii) when an outsourced service is brought in house.
Essentially it allows the ‘employees’ to transfer their employment to the new owner of the business/service provider, retaining all of their contractual terms and conditions of employment and length of service. The rights and liabilities of the outgoing employer are transferred to the new employer.
It can potentially apply to employment businesses if they take on the supply of agency workers to a client from another employment business. The incoming employment business will inherit employees of the outgoing employment business.
What is the Dewhurst case about?
TUPE protection only applies to ‘employees’ as defined in the legislation. The definition of an employee for TUPE, on the face of it excludes those working on a contract for services. It has broadly been taken to be the case that only employees engaged on contract of employment, apprenticeship or otherwise are in scope. So for our members, TUPE generally only becomes a consideration if they take on/lose contracts with agency workers who are employed (on a contract of employment). However there has been a long running question about whether TUPE could apply to the broader category of ‘workers’ and not just employees. Most agency workers engaged are engaged on contracts for services and have worker status, which has excluded them from protection under TUPE. We have advised members to be cautious about this, but stated that in the absence of a case explicitly ruling that TUPE applies to workers, the broadly accepted view was that it did not.
The London Central ET has now ruled that the definition of an employee in TUPE should be interpreted as including workers as well as employees; this extends the TUPE protections to the claimants in the case who were workers – with rights to NMW, rights under the Working Time Regulations (holiday pay, rest breaks etc), rights under the Equality Act.
An ET decision is not binding on other ETs which means that a different ET could reach a different decision. However if the Dewhurst case is appealed (which is most likely) and the Employment Appeal Tribunal uphold the decision, this will set a precedent to which other ETs will be bound.
The impact for employment businesses will be significant as TUPE imposes obligations that members will find onerous, such as the consultation process with affected employees, information sharing, and restrictions of changing the contractual terms of staff who are TUPE’d over to them.
We already have good guidance on TUPE on the REC Legal guide, which members who deal with employed agency workers have used for some time. The wider impact for the sector will be seen if the case reaches the EAT and the decision is upheld.