Employment tribunal: TUPE applies to workers as well as employees

The decision is not binding on other employment tribunals, but should be taken into account by them unless and until it is appealed. The employers in the case, courier companies Ecourier and City Sprint, have 42 days in which to do so.

The couriers are so-called 'limb b workers' for the purposes of other employment legislation, including the 1996 Employment Rights Act (ERA). In her ruling, employment judge Joffe found that in order to interpret TUPE in line with the EU's Acquired Rights Directive, the rights of these workers must be transferred on transfer of employment or service provider along with the rights of employees.

Employment law expert Ed Goodwyn of Pinsent Masons, the law firm behind Out-Law, said: "The judgment seems to reflect the mood music expanding workers' rights as it follows a line of cases relating to the so-called 'gig economy'."

"We now have yet another case which highlights the urgent need for the government to complete the independent research on employment status heralded in its Good Work Plan - which followed the Taylor Report - and to introduce legislation to provide clarity for both employers and workers on employment status of individuals," he said.

TUPE protects employees if the business in which they are employed changes hands, by moving them and any liabilities associated with them from the old employer to the new employer by operation of law. The regulations define 'employees' as those who work "under a contract for service or apprenticeship or otherwise". The meaning of the words "or otherwise" has not been further clarified.

The tribunal's decision in this case turned on the interpretation of the words "or otherwise". The three couriers who made the claim are legally 'workers', an intermediate status between employee and the genuinely self-employed which gives them certain rights including National Minimum Wage, paid holiday leave and protection from discrimination in the context of employment under the 2010 Equality Act.

Employment judge Joffe found that references to 'employment relationship' in the Acquired Rights Directive must be read as including these individuals in order for the protections in the directive to operate as intended.

"If 'employment relationship' were to be so narrowly defined that a member state could exclude limb b workers/ Equality Act employees, the Acquired Rights Directive would not operate, for example, to transfer liability against an insolvent transferor to a solvent transferee in the case of a limb b worker who had been discriminated against by the transferor," she said.

"It is difficult to see how it can be in accordance with the Acquired Rights Directive and the Framework Directive, read as parts of a cohesive whole, 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 transferred and preserved. I have regard in particular to Recital 3 [of the directive] which emphasises the purpose of the Acquired Rights Directive to ensure rights are safeguarded," she said.

Employment law expert Ed Goodwyn said that the decision did not "expand" the rights of limb b workers to include the likes of unfair dismissal, or redundancy pay. However, employers may have to adjust their approaches to acquisitions and outsourcing deals, he said.

"Transferor employers who choose to follow this decision pending any appeal will need to include limb b workers in the employee liability information they give to transferees, while transferees will need to include limb b workers as part of their wider due diligence," he said.

"In addition, pre-transfer consultation and information processes will now need to include limb b workers and their representatives in order to avoid expensive protective award claims of up to 13 weeks' pay per worker," he said.