In this article, Commercial Property Specialist Charlie Bennett discusses how Heads of Terms work, whether they’re legally binding and what to look out for when negotiating.
What is the definition of a ‘worker’? Employment Rights Act 1996
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:
- A contract of employment, or
- 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 definition of an employee
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.
Tribunal ruling on worker status
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.
Head of Employment, Paul Burton says “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.”
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and the Employment team will be happy to discuss it with you.
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