The EAT has held that TUPE does not apply where a new provider ceases to carry out services “on the client’s behalf.”
CTP Ltd operated a subsidised park-and-ride bus service under a contract with the local council. A private travel company, LRC Ltd, then decided to run its own unsubsidised service on the same route. As the council was not allowed to run a subsidised service in competition with a commercial service, it terminated its contract with CTP.
Although the bus route was the same, LRC provided its own buses, did not take any assets from CTP and received no council subsidy. LRC did liaise with the council over bus timetabling but decided to reduce the frequency of the service despite the council’s objections.
The EAT has held that TUPE does not apply where a new provider ceases to carry out services “on the client’s behalf.”
CTP claimed that its drivers should TUPE transfer to LRC and the tribunal was asked to decide if there had been a service provision change. The tribunal found that although the “activities” were the same, they were no longer carried out “on the client’s behalf”. LRC was operating the service for its own commercial gain and the council was now no more than an “interested bystander”. The EAT agreed, the council was no longer the client and, as such, TUPE did not apply.
There have been a line of cases in recent years addressing the question of ‘who is the client’ in a TUPE context. This case, once again, reiterates that this is a question of fact for the Tribunal and that benefitting from a service does not, necessarily, make you the client for the purposes of TUPE.
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