London Central employment tribunal has handed down a judgment in a TUPE case which, whilst not binding, is potentially hugely significant for employers. In Dewhurst and ors v (1) Revisecatch Limited t/a Ecourier (2) City Sprint (UK) Limited the tribunal was asked to determine the novel point whether the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply to so-called ‘limb b’ workers within s.230(3)(b) of the Employment Rights Act 1996 (ie an individual who has entered into or works under a contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual).

The case concerned 3 cycle couriers who brought claims for holiday pay and failure to inform and consult under TUPE. The first respondent engaged the services of the couriers from 1 February 2018. The second respondent engaged their services until 31 January 2018, when the second respondent lost a contract for the provision of courier services to HCA Healthcare to the first respondent. In a previous employment tribunal decision one of the claimants had been found to be a limb b worker of the second respondent.

Regulation 2(1) of TUPE states that for the purposes of TUPE protection, an “employee” means any individual who works for another person whether under a contract of service…or otherwise but does not include anyone who provides services under a contract for services. As a preliminary issue the tribunal had to determine whether that definition covered limb b workers such that the claimants were entitled to TUPE protection.

The tribunal held that TUPE does apply to limb b workers.

The reasoning of the tribunal was that the Acquired Rights Directive (ARD – which TUPE implements) protects those whom domestic law recognises as employees. UK law uses the term “employee” in two distinct ways; both traditional employees having a contract of service and also employees who are sometimes identified as workers. Both categories are covered by the ARD. The tribunal found that the definition of employee in regulation 2(1) of TUPE was intended to confer rights and protections on a broader class of employees than those employed under a contract of employment as reflected in the words ‘or otherwise’. The tribunal found that it could properly give effect to the ARD by concluding that ‘or otherwise’ is to be construed so as to embrace limb b workers, or alternatively that the limb b definition should be implied into reg 2 of TUPE.

It is important to note that this is only a first instance decision and, as such, it is not binding on other employment tribunals. However, unless and until there is an appellate decision which finds differently, this decision is likely to be  persuasive. This leaves employers in a difficult position when dealing with the loss of a contract or sale of a business or part of a business which is staffed by individuals who are not employees. In many cases the employer may consider that these individuals are not even limb b workers, but are self-employed. However, if they are subsequently found by a tribunal to be workers, there could be substantial liabilities for failure to inform and consult under TUPE (up to 13 weeks’ actual pay per affected worker). Businesses taking on such contracts or buying businesses will need to consider the potential for liabilities to transfer. However, employers may not want to treat such individuals as being covered by TUPE as this may jeopardise any arguments on worker status.