TUPE

TUPE

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The worker status debate leached into the TUPE sphere towards the end of 2019. A ‘worker’ is defined by section 230(3) of the Employment Rights Act 1996 (ERA) as:

An individual who…works under:

  1. A contract of employment, or
  2. Any other contract…where the individual undertakes to do or perform personally any work…for another party who…is not…a client or customer of…the individual.

TUPE is a legal mechanism which protects employees when the business they work for transfers to a new owner. TUPE defines ’employee’ as ‘any individual who works for another person whether under a contract of service or apprenticeship or otherwise‘ but does not include the genuinely self-employed. Previously there has been no case law on whether workers are covered by TUPE. Employers have considered it unlikely and usually limited TUPE obligations to employees.

Dewhurst v Revisecatch & City Sprint may have put a cat among the pigeons then. In this case, three workers said that they fell into the definition of ’employee’ under TUPE. They brought claims for holiday pay and failure to inform and consult. At a preliminary hearing to decide whether TUPE applied to them, the employment tribunal decided that workers were ’employees’ under TUPE. They were covered by the ‘or otherwise’ part of the definition. Only the genuinely self-employed were not included. The judge said that this interpretation was necessary to preserve the employment rights of those who work within businesses when they change hands.

This is an employment tribunal decision which means that other tribunals or courts don’t have to follow it. The employers are likely to appeal though, and the appeal decision will create binding law. Most employers treat workers differently to employees in a TUPE situation. If this decision is upheld on appeal, employers will need to revisit their approach to workers when considering their obligations under TUPE. With 13 weeks’ pay at stake per ’employee’ for a failure to inform and consult, any failure could be costly. Watch out for an appeal decision towards the end of the year.

Astons Solicitors
January 14th 2020

TUPE transfer: new security contractor takes over equipment but not staff

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In Securitas v ICTS Portugal the CJEU held that there can be a transfer of an undertaking when a new contractor takes over security services from a previous contractor without accepting the employees assigned to that work, if the new contractor takes over the equipment which is essential in order to deliver those services.

Securitas took over the contract for security services at a port in Azores but refused to transfer the 17 staff, employed by the previous contractor ICTS, to its employment. The Portuguese Supreme Court referred questions to the CJEU with regards to the application of the Acquired Rights Directive to the Portuguese Labour Code on transfers.

The CJEU stated that when there is a service that is solely based on manpower, there would be no transfer of employees to a new provider as an economic entity will not retain its identity. However, if an economic entity is based mainly on equipment then not taking on employees won’t stop a transfer occurring. In this case, the court would need to decide whether ICTS had transferred to Securitas any equipment or assets purely for the purpose of security activities. If this was the case then there would have been a transfer.

Written by

Rachael Jessop
21st November 2017

TUPE and garden leave

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In ICAP Management Services Ltd v Berry where a senior executive was placed on garden leave he considered that a TUPE transfer would enable him to terminate his leave early.

Mr Berry gave notice to his employer, ICAP Management Services Ltd to join a competitor, BGB Services (Holdings) Limited. ICAP put him on garden leave. During this time ICAP was the subject of a share sale acquisition by Tullet Prebon plc. Mr Berry considered that this acquisition led to a TUPE transfer and objected to it under Reg 4(7) of TUPE. This would have enabled his contract to be terminated and allow him to take up his new position earlier that would have otherwise been possible. ICAP did not agree and sued to enforce the garden leave.

Mr Berry’s case was rejected in the High Court as TUPE requires a change of employer. The share sale acquisition in this instance did not result in a change of employer, the operating and service companies remained the same and business carried on exactly the same way that it had before. To this end, there was no TUPE transfer and, therefore, nothing for Mr Berry to object to. ICAP succeeded in their application and the garden leave was enforced.

Written by

Edward Aston
20 June 2017

ACAS Guidance on TUPE

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ACAS have issued guidance on the 2014 TUPE changes which is intended to assist to get to grips with the legal changes that came into effect on 31st January 2014. To many employers, TUPE presents as many challenging arguments as it does to lawyers. Despite it being in existence for many years now there are still employers to whom TUPE has no meaning and of which they had no awareness actually applied to their business transactions until it was too late. Others are more savvy, but just need some guidance to navigate them through the complex legal maze that is TUPE.

Over the past decade there has been a rise in the number of restructures and outsourcing has grown in popularity in both the private and public sectors. Such is the demand that Anne Sharp, ACAS’ Chief Executive has said that ACAS handled approximately 30,000 calls on the subject and their web guidance was viewed over 220,000 times. Certainly this mirrors our own experience in that we are seeing more enquiries around TUPE from both the employer and employee’s perspective.

Written by
Edward Aston
10th March 2014

TUPE Changes

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The new TUPE Regulations have now been published, are currently before Parliament and due to come into force on 31st January 2014. There are some transitional provisions that will apply to information and consultation for small businesses and employee liability information but those involved in outsourcing, insourcing or sales/acquisitions of businesses need to get up to speed with the new Regulations for transfers after this date.

The main changes for businesses are:

  • Allowing small businesses to consult directly with affected staff rather than have to elect representatives;
  • With the transferor’s written consent permitting consultation to start prior to transfer and count towards the collective redundancy consultation obligations;
  • For up to one year post transfer, allowing collective agreement terms to be renegotiated for up to one year post transfer;
  • Clarification that a service provision changeover only occurs where the transferring activities are fundamentally the same;
  • Post transfer changes to contracts in terms of location can amount to an ETO reason for unfair dismissal and variations to contract purposes.

Guidance is expected in due course on the new Regulations and we will cover the key changes in our forthcoming training seminar so register your interest now.

Written by
Robin Aston
17th January 2014