Circumstances of a Service Provision Change

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14 Oct 2016

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Under the TUPE Regulations 2006, a relevant transfer can apply to the circumstance where there is a service provision change (“SPC”) between entities. The circumstances where it can be said there has been a SPC has recently been examined by the Employment Appeal Tribunal (“EAT”) in the case of CT Plus (Yorkshire) CIC v Black and ors.

The facts of the case were that CT Plus had a contract with the Council to operate a subsidised park-and-ride bus service from the location of Priory Park in Hull. Then in 2013 a private travel company, LRC Ltd, began to run its own subsidised service using the same route – which they were allowed to do once they had informed the appropriate Government agency. The Council was not entitled to operate a subsidised service in competition with a private commercial service and therefore it terminated the contract for the park-and-ride bus service with CT Plus on 28th September. On 29th September LRC Ltd commenced its service, it used its own buses and received no subsidy from the Council, but it did pay the Council a monthly fee to use the facilities of Priory Park. CT Plus asserted that by LRC ltd operating the same park-and-ride service as they had meant that there had been a SPC within the meaning of the TUPE Regulations 2006 and argued that the bus drivers employment therefore transferred from CT Plus to LRC ltd. Employment Tribunal proceedings were issued in order to determine whether there had been a SPC under the TUPE Regulations 2006. The Employment Tribunal determined that there was no SPC. The “activities” under the definition of SPC was the running of the park-and-ride service and prior to 29th September this was carried out by CT Plus on behalf of the Council, after this date it was carried out by LRC ltd as their own commercial enterprise and not on behalf of the Council. Therefore, LRC ltd were not carrying out the activity on “the client’s behalf” as outlined in the TUPE Regulations definition of an SPC and therefore this meant that the circumstance did not fall within the definition of an SPC for the purposes of the TUPE Regulations and therefore the bus drivers employment did not transfer over to LRC Ltd. CT Plus appealed this decision to the EAT, arguing that the Council remained the ‘client’ when LRC Ltd began operating the service. However, the EAT rejected this argument and outlined that ‘client’ for the purposes of the TUPE Regulations was an organisation which was in a position to carry out the ‘activity’ by itself or by commissioning other to carry them out on its behalf. However, there was sufficient evidence to support that LRC Ltd was operating this service as their own commercial venture and made their own decisions as to how it was to run. Therefore, the Employment Tribunal’s decision that the Council was not the client of LRC ltd and was not running the service on its behalf was not perverse and one it was entitled to make in the circumstances. Accordingly, the EAT dismissed CT Plus’s appeal. This case highlights that the area of service provision changes under the TUPE Regulations can be very broad and where one service ends and another commences there is always a potential risk that there will be an argument that the TUPE Regulations apply and the employees’ employment transfers across.

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