This month the EAT has revisited TUPE and the issues presented
by a change in client. Specifically, it has considered whether TUPE
can apply in the form of a service provision change when a
subsidised bus service is replaced by a competitor.
Hull City Council (the Council) subsidised a park-and-ride bus
service for CT Plus (Yorkshire) CIC (CTP) after CTP won a tendering
exercise. In 2013, the Council invited other tenders. Stagecoach
decided that it could run the service without a subsidy from the
Council and set up its own service on the same route. The Council
was not authorised to run a subsidised service in competition with
a commercial service, therefore it ended its contract with CTP on
28 September. Stagecoach began operating its service the next day.
CTP asserted that Stagecoach was obliged to take on its drivers
under the service provision change principles in the TUPE
The court's decision
The EAT decided that TUPE did not apply. Specifically, the
activity carried out before 29 September was the running of the
park and ride service by CTP on behalf of the Council. However,
from 29 September onwards, though the activity remained the same,
this was not carried out "on the Council's behalf"
but was instead undertaken by Stagecoach for its own commercial
interest. Therefore, CTP's argument that the Council was the
client both before and after the 29 September failed and Regulation
3(1)(b)(ii) was defeated.
The EAT's definition of "client" in this case is a
useful reminder of how to interpret its meaning in a TUPE context.
Though the users of the bus service (the passengers) essentially
remained the same, they are not the clients for the purpose of the
Though this particular scenario does not occur very often, it is
likely we may see similar situations arise as a result of mounting
pressure on councils to cut costs. Therefore, we might see an
increasing number of employees in this position, without any right
to transfer to a subsequent provider of services.
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