CT Plus (Yorkshire) CIC v Black and others UKEAT/0035/16
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) a relevant transfer will occur where there is a “service provision change” (SPC). This can include situations where the activities cease to be carried out by a contractor on a client’s behalf and are reassigned to another person (a subsequent contractor) to carry out on the client’s behalf.
In this case the EAT considered whether a tribunal had correctly held that there was no SPC on the basis that the new contractor was providing a bus service for its own commercial purposes and not on behalf of the council.
A park-and-ride bus service from a car park on the outskirts of Hull owned by Hull City Council to the city centre was operated by CT Plus Limited (CT), a community interest company owned by a charity. The relationship was governed by a contract between CT and the council dated 2 February 2010 which set out detailed terms and the subsidy to be paid by the council to CT.
The route was not exclusive to the council and it was open to other bus operators to run a commercial service on the same route by giving notice to the Vehicle and Operator Service Agency (VOSA). If that happened, the council subsidised service would have to stop unless the operator of the subsidised service thought it viable to continue to operate the service itself without subsidy.
The council invited tenders for operating the bus service in 2013 and Lincolnshire Road Car Ltd (Stagecoach) was one of the companies which tendered. The tendering process was delayed. Stagecoach formed the view that it could run the service commercially without a subsidy. Stagecoach gave notice to VOSA that it was going to operate the route commercially. The effect was that the Council gave notice to CT to terminate the subsidised contract. Stagecoach began to operate the service on 29 September. CT stopped its service at the same time.
Stagecoach provided its own buses. It took nothing directly from CT, had no contract similar to the one that governed the relationship between CT and the Council and received no subsidy. It reduced the service outside peak hours (despite the Council’s reservations) and recruited its own team of drivers, mainly by internal transfer. It declined to take on any drivers from CT on the basis that there was no TUPE transfer or SPC. It did have both a legal and practical relationship with the Council in that it used facilities at the park and ride site for a fee, and liaised with the Council over matters concerned with the service.
CT and some drivers brought a claim to establish whether there was a TUPE transfer and who should compensate the employees. At a preliminary hearing, the ET decided that there was no TUPE transfer or SPC. Stagecoach was not carrying out the activities on behalf of a client, but rather was carrying out the activities on its own behalf. The council was no more than an “interested bystander”. There was no contract with the Council, no subsidy – “there simply was no client anymore”. Therefore there was no SPC.
The EAT agreed and dismissed the appeal. It referred to cases which confirm that the client (Council) remain the same throughout the SPC and that a “common sense and pragmatic approach is required” when considering SPC cases.
What to take away
One could see why, from the drivers’ perspective they thought that the service was continuing and that TUPE should apply. Unfortunately though this was a situation where one service ceased and another, separately, commenced. So where organisations run subsidised services and to cut costs, turn to commercial ventures, such a process could occur in such a way as to leave employees without any right to transfer to the subsequent provider.