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 Regulations 2006.
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 TUPE Regulations.
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.