TUPE, or not TUPE, that is the question.
TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations 2006, to give it its full name, is the protection of an employee’s rights when there is a business transfer or a change in service provider or an insourcing or outsourcing of an activity.
This case will deal with a potential service provision change, which can be found in Regulation 3 of the TUPE Regulations. In general terms, this is when a client who engages an external contractor to perform a service reassigns the contract to a different contractor or brings the work in-house.
In light of that, today’s question is:
Can there be a service provision change under TUPE if the activity being carried out is no longer on behalf of the client?
CT Plus, the First Respondent, operated a park and ride scheme near Hull. The First Respondent employed several people, including Black, the Claimant. The scheme was subsidised by the local Council, who also owned the car park. Prior to these events, the First Respondent had successfully tendered to run the scheme and employees of the previous operator transferred under TUPE to the First Respondent.
The Council invited other parties to tender for the scheme. However, this process was delayed. Stagecoach, the Second Respondent, had planned on tendering but subsequently decided that it could operate the park and ride scheme without a subsidy from the Council. The Second Respondent began running the scheme on the same day the First Respondent ceased operations.
The Second Respondent provided its own operational infrastructure to run the scheme, including staff and vehicles and paying a license fee to the Council for use of the site. The First Respondent believed that staff were entitled to transfer under TUPE to the Second Respondent. The Second Respondent didn’t agree and the employees’ employment ended.
The Employment Tribunal had to decide whether TUPE applied and whether there had been a relevant transfer for the purposes of TUPE. If there had been a transfer, the Second Respondent was liable for the employees’ unfair dismissal. If there had not been a transfer the First Respondent was liable for the employees’ unfair dismissal. The staff were caught in the middle of the dispute between the First and Second Respondents.
The ET held there had been no transfer under TUPE. Despite the Second Respondent performing the same service as the First Respondent the Council was no longer a client and merely an interested bystander. Therefore there was no transfer as the Second Respondent wasn’t a contractor of the Council. The First Respondent appealed but the EAT rejected the appeal. It held that the ET was right to find that the Council was no longer a client.
The takeaway point:
No, if the service is not being done on behalf of a client and there is no relevant business transfer then Regulation 3 isn’t engaged and TUPE doesn’t apply. If you would like advice on this issue please contact us. You can read more on TUPE here, or, if you enjoyed this article, please share it.