TUPE Update – Bus Route Contract Transfers

In the recent case of CT Plus v Black and ors, the Employment Appeal Tribunal confirmed that there was no “service provision change” and therefore no transfer under TUPE.

This was in circumstances where a Council cancelled the contract for a subsidised park and ride bus service in Hull and a separate company began to run a service for its own commercial benefit.

Law

Under TUPE a “service provision change” is where either:

• a client engages a contractor to do work on its behalf; or
• a client reassigns the work from one contractor to another; or
• a client brings the work back “in house” from a contractor.

If there is a “service provision change” then the rules under TUPE apply and employee rights and liabilities transfer from one organisation to another.

Facts

CT Plus ran a Council subsidised park and ride operation.

Hull Council invited other tenders and one was entered by Stagecoach. During the tender process Stagecoach realised that it could run the service commercially without a subsidy. It then took over the site which had been run by CT Plus and CT Plus stopped operating the park and ride service at the same time.

CT Plus employees issued claims arguing that their employment should have transferred to Stagecoach under TUPE as this represented a “service provision change”.

The Employment Tribunal Judge rejected this on the basis that Stagecoach was not carrying out the activities on behalf of a client (Hull Council in this instance) and that the Council was effectively no more than an interested bystander.

The CT Plus Employees appealed.

Judgment

The appeal was rejected.

The Employment Appeal Tribunal insisted upon a common sense and pragmatic approach to the “service provision change” rules.

It concluded that because Stagecoach was carrying out a service as a commercial venture on its own behalf, not on behalf of the Council as a “client”, there was no service provision change and no TUPE transfer.

Impact of this Judgment

Gordons considers that, whilst it can have a wider application, this Judgment will be of particular interest to organisations in the transport sector where tendering processes involving subsidies are common place.

It also helps to provide some certainty as to the application of TUPE in similar cases and will enable organisations to more boldly assert TUPE does or does not apply.

In particular the Judgment:

• confirms that both before and after the change, the activities must be carried out on the client’s behalf; and
• clarifies the meaning of “client” as an organisation that is in a position to carry out activities either itself or by commissioning them from others to carry out those activities on its behalf.#

Click here for a link to the full case transcript.