The importance of observing TUPE regulations when a contract moves between operators has been underlined by an Employment Tribunal case where a minicoach business was found liable for £7,500 compensation to a coach operator for not doing so.
TC Mini Coaches of Louth (the respondent) was ordered to pay that amount to PC Coaches of Lincoln (the claimant) for failing to pass on legally required employee liability information, which had put the respondent in breach of TUPE.
Additionally, the Tribunal found that any changes to terms and conditions of employees that were due to transfer and that were made by the respondent during the consultation period were unlawful. It declared that an alleged pay uplift by £2 per hour was claimed by TC Mini Coaches only because of the pending contract change, and “in retaliation” for its loss.
PC Coaches presented its claim in May 2023. It was heard seven months later in December. During February 2023, the business had won contracts with Lincolnshire County Council for bus services under the Callconnect brand. TC Mini Coaches was among the operators to previously run those. The contracts changed hands from 27 March 2023.
TC Mini Coaches was obliged to supply accurate and full employee liability information to PC Coaches, but it never did so. PC Coaches also alleged that after the contract award and during the consultation period, the respondent had “without any commercial rationale or notification” falsely purported to grant a pay rise to employees that would transfer with it.
The coach operator thus sought a declaration that any such pay rise was void under regulation 12 of TUPE.
The judgement notes that PC Coaches attempted to contact TC Mini Coaches Director Tina Warren on 15 February 2023 seeking the employee liability information. No response was forthcoming. On 18 February, she told drivers transferring to the claimant that they would receive a pay rise before their last day with TC Mini Coaches, which was 25 March 2023.
No such increase came forth before staff transferred, the judgment states. Ms Warren wrote to PC Coaches on 24 February 2023 claiming that drivers earned £12 per hour. They were actually paid £10 per hour.
Those drivers confirmed at an open meeting with PC Coaches on 28 February that they earned £10 per hour. They were informed at the same time that their rate would increase from 1 April 2023 to satisfy a minimum wage uplift.
The meeting was called due to factors including no required information having been received from TC Mini Coaches, although Ms Warren had notified PC Coaches that she intended to forward it, and that the delay was due to illness.
Of the 15 employees that transferred to PC Coaches on 27 March 2023, seven maintained that there had not been a pay rise to £12 per hour from TC Mini Coaches. Eight said that there had been, and notified their new employer that they were working “under protest.”
Those drivers later issued Employment Tribunal proceedings against PC Coaches for non-payment of wages, but that action was dropped before it was heard. PC Coaches has never disputed that TUPE applied.
In its judgment on the original matter, the Tribunal states that TUPE requires the transferor to notify the transferee of the necessary employee liability information not less than 28 days before the transfer, unless special circumstances are in place. If the transferor fails to do so, the Tribunal shall make a declaration to that effect, and may award compensation.
In addition, the Tribunal declared that there was “no valid pay rise to £12.00 per hour” before transfer. It continues: “Even if [there] was, it is clear from the evidence that [if] any pay rise [was] awarded, the sole or principal reason for it was the transfer.
“Under regulation 4(4) of TUPE, any purported variation of a contract of employment is void if the sole or principal reason for the variation was the transfer.”
The judgment highlights as wrong the respondent’s assumption that it could award a wage increase prior to the transfer and that the claimant would be liable for paying it. The Tribunal adds that the claimed pay rise to £12 per hour was “in retaliation” for loss of the Callconnect contract to PC Coaches.
As a result of the failure to supply employee liability information, the Tribunal found that the respondent did not comply with regulation 11 of TUPE. An award of compensation was set at £500 per affected employee.
PC Coaches has subsequently had accepted a claim for costs against TC Mini Coaches and the drivers that launched proceedings for non-payment of wages. That will be heard at a future date. TC Mini Coaches surrendered its O-Licence during week ending 9 February.
