TUPE does not apply where the service provision continued but not "on the client's behalf"

Introduction

In the recent case of CT Plus (Yorkshire) CIC v Black and Others UKEAT/0035/16, the Employment Appeal Tribunal considered whether a service provision change under TUPE would arise when a new contractor starts to provide a service for its own commercial purposes instead of the original client.

Under TUPE, a "relevant transfer" will occur where the activities cease to be carried out by a contractor on a client's behalf and are reassigned to another person to carry out on the client's behalf.

The Case

CT Plus (Yorkshire) CIC was a community interest company owned by a charity who operated a park and ride service from a car park owned by Hull City Council. The service was governed by a contract between CT and the Council, under which the Council subsidised CT for the service. The park and ride route was not exclusive to the Council and was open to other bus operators to use to run a commercial service from, provided they gave notice to VOSA.

If a commercial service used the route, the council-subsidised service operated by CT would have to stop unless CT could continue to operate without the subsidy.

In 2013, the Council invited tenders for operating the bus service, and Stagecoach was one of the companies which tendered. Stagecoach gave notice to VOSA of its intention to run a service commercially without subsidy, which lead the Council to terminating their contract with CT. The CT drivers bought a claim to establish whether TUPE applied.?

At the preliminary hearing, the Employment Tribunal held that there was no TUPE transfer due to the following factors:

• Stagecoach provided its own buses;
• Stagecoach did not take over anything from CT directly;
• Stagecoach did not enter into any contract with the Council - instead, they were granted a non-exclusive licence to use the car park facilities;
• Stagecoach did not receive a subsidy; and
• Stagecoach recruited its own team of drivers.

EAT Decision

The EAT dismissed the appeal. The EAT held that, for TUPE to apply, the client must remain the same before and after the service provision change. Stagecoach was carrying out the activities on its own behalf, not on behalf of a client. The Council was considered to be nothing more than an "interested bystander".

Conclusion

This decision provides clarity as to how a Tribunal is likely to interpret "on the client's behalf". It was never disputed that the Council was not the client - instead, the real issue was that Stagecoach was carrying out activities on its own behalf rather than on behalf of the Council.