As more companies utilise the gig economy to create a flexible workforce, the rights of workers become even more of a controversial topic.
The distinction between employees and workers has long been a contentious issue.
However, the arguments surrounding the different types of personnel typically centres around their rights in the workplace concerning annual leave and salaries.
While the rights of workers in these areas still remain in issue, the Employment Tribunal has also considered workers’ rights under TUPE.
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects employees if their employing company undergoes a change of ownership, but what happens to workers in this instance?
Are Workers Protected Under TUPE?
Many of the arguments surrounding workers’ rights centre on the definition used in the Employment Rights Act 1996.
However, the definition of a worker actually varies from one statute to another.
When assessing workers’ rights in relation to a change of company ownership, it follows that the definition given in the Transfer of Undertakings (Protection of Employment) Regulations is used.
According to TUPE, an individual is classed as an employee if they are, ‘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.’
Personnel who are not protected by a contract of employment are, under TUPE, known as a ‘limb (b) worker’.
As highlighted in the Employment Rights Act, workers may work under a variety of other contracts, but the absence of a contract of employment restricts their rights and prevents them from being classed as employees.
To date, the Employment Tribunal has had to the opportunity to consider workers’ rights under TUPE on two notable occasions; the recent Dewhurst and others v Revisecatch t/a Ecourier and City Sprint and McCirick v Channel 4 Television and IMG Media.
In the recent case of Dewhurst, an Employment Tribunal Judge reiterated the findings in McCirick. Examining the definition of workers in TUPE in accordance with the EU Acquired Rights Directive, they found that the statutory-specific definition was broad enough to include workers as employees.
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects employees if their employing company undergoes a change of ownership, but what happens to workers in this instance?
What Does The Employment Tribunal Decision Mean For Businesses?
Following the recent case, it is arguable that workers are, effectively, considered employees for the purposes of TUPE.
Accordingly, workers may be transferred to the new employer in the same way as employees, without the need to renegotiate their contracts or reapply for their positions. It should be noted however that the decision in Dewhurst is not legally binding on all other Tribunal Judges as it is a decision of “first instance” rather than being a binding decision issued by a senior court.
The decision will likely be appealed. If that occurs, the Employment Appeal Tribunal will re-examine the matter.
If the decision is upheld, it will then amount to a binding precedent and all other Tribunals will have to follow it. The impact of the decision could be huge, as workers will need to be accounted for throughout TUPE consultation and collective information processes.
For companies who rely solely or largely on the gig economy, this could drastically change the way any future modifications to company ownership are managed.According to the latest decision, businesses will need to consider workers, in addition to traditional employees, in the following TUPE-related circumstances:
- When assessing whether representative structures cover all personnel who require representation under TUPE
- When assessing employee elections
- When determining what measures will be used regarding the treatment of personnel post-transfer
- When providing employee liability information to transferee.
How Can Businesses Protect Themselves?
In Dewhurst, the Employment Tribunal decided to treat workers as employees under TUPE.
As such, workers’ rights are increased, and businesses will be under additional obligations.
For companies who use a mix of traditional employees and workers, this change may not be too difficult to cope with.
As above though, this question is likely to be the subject of further scrutiny however and the issue if far from over. If your business relies predominantly on gig workers, however, the change could have a significant impact on how transfer of ownerships is handled.
For companies who have an existing HR department, it’s likely they will be under increasing pressure due to the rise in personnel who need to be considered under TUPE.
Alternatively, businesses which operate without an in-house HR department may need to consult with outsourced HR experts in order to implement ownerships changes in accordance with TUPE, when applicable. Due to the serious sanctions associated with breaches of TUPE, all types of businesses who use human personnel will need to be aware of these critical changes.
Despite, or, perhaps, because of, the rise of the gig economy, it appears that workers’ rights are increasing. Whilst the distinction between employees and workers under the Employment Rights Act 1996 is still very much in force, the changes under TUPE may be indicative of an evolving attitude towards the rights of workers.
Unless or until this decision is challenged in the courts, businesses must ensure that they recognise workers as employees for the purposes of TUPE and implement the relevant protocols should a change of ownership occur.
