Employment Law Update – TUPE: no service provision change

The Employment Appeal Tribunal (EAT) was satisfied that there was no service provision change for the purposes of TUPE when a new operator took over a bus route for its own commercial purposes.

CT Plus (Yorkshire) CIC v Black and others, EAT

Facts

CT Plus operated a park-and-ride bus service under a contract with (and subsidised by) Hull City Council. It was open to other bus operators to run a commercial service on the same route, although this would mean that the subsidised service would stop.

Stagecoach subsequently decided to start its own commercial service on the route, resulting in the Council giving notice to CT Plus to terminate their contract. Stagecoach took over the service on the day the contract with CT Plus ended, but did not take on any CT Plus drivers on the basis that they did not consider TUPE to apply.

The employment tribunal decided that there had been no TUPE transfer or service provision change. Stagecoach was not carrying out the activities on behalf of a client (the Council), but was running the service on its own behalf. It did not enter into an equivalent contract with the Council, nor did it receive a subsidy or take over anything directly from CT Plus.

EAT decision

The EAT agreed with the tribunal and dismissed the appeal. For a service provision change under TUPE, the client must be the same before and after the transfer. In this case, the Council ceased to be the client when it terminated the contract with CT Plus and became no more than an “interested bystander”.

Consequences

From the perspective of the bus drivers and passengers, it is understandable that this change in bus operator might have appeared to be a service provision change protected by TUPE. However, this decision illustrates the importance of looking very carefully at the contractual arrangements between the parties and establishing whether the client is in fact the same before and after a service provision change.

The content of this article is for general information only. For further information regarding TUPE, please contact a member of Birketts’ Employment Team. Law covered as at September 2016.