- September 22, 2016
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
The termination of a subsidised park and ride bus service and its replacement by a fully commercial, unsubsidised, alternative on the same route, gave rise to a tribunal decision which provided important guidance on the operation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
The service had been run by a charity under contract with the local authority, from which it received a substantial subsidy. A much larger bus company decided that it could operate a somewhat reduced service profitably, without subsidy. In the circumstances, the charity’s contract was terminated.
The new operator declined to take on the charity’s drivers and, hence, proceedings were brought before an Employment Tribunal (ET) in order to establish whether there had been a TUPE transfer and who should compensate those who had lost their jobs. The ET resolved that issue in the new operator’s favour.
In ruling on the charity’s challenge to that decision, the Employment Appeal Tribunal (EAT) noted that the new operator had both a legal and practical relationship with the council. It paid a monthly sum for use of facilities at the park and ride hub and liaised with the council in respect of a range of matters connected to the service.
In dismissing the appeal, however, the EAT noted that the new operator used its own buses and drivers. It was performing the service as a commercial venture, for its own benefit, and was not acting on behalf of the council, which could not be viewed as its client. The provisions of TUPE had been applied by the ET in a commonsense and pragmatic manner, without error of law.