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July/August 2017
For Business, Corporate Travel & Meeting Buyers & Arrangers

Package Travel Directive: a positive development for corporate travel?

The new Package Travel Directive (PTD) was adopted by the EU on the 31st December 2015 and is set to be applied in Member States by January 2018. However, don’t be fooled by the Directive’s name – it’s not just for leisure travellers. It is vital that businesses arranging travel for their staff are clued up as to their potential liabilities under the existing package travel legislation and how the changes to the legislation might be utilised to their advantage.

What is the Package Travel Regulation?

It’s quite a complex area, so let’s start off by giving a bit of background. The Package Travel, Package Holidays and Package Tours Regulations 1992 (derived from the previous PTD adopted in 1990 by the EU) were aimed at protecting consumers when booking travel packages. The legislation defined a package holiday as ‘the pre-arranged combination of at least two of the following components (accommodation, flights, other tourist services) when sold or offered for sale at an inclusive price and when the service covers a period of more than 24 hours…’ Therefore, a flight to Brussels with accommodation for two nights booked under the one price of £299 with no breakdown of cost for flights and hotel will be considered a package within the definition.  Once a package is in existence, the organiser is responsible under the 1992 Regulations for all of the elements of the trip and could be found liable to pay compensation to the consumer and/or their family if personal injury or death occurs as a result of any improper performance of the travel contract.

The Regulations also include a clear definition of the “organiser”, as “the person who, otherwise than occasionally, organises packages and sells them or offers them for sale, whether directly or through a retailer". 

How does this relate to business travel?

In a business context, a firm might regularly arrange packages for its employees.  For example, a business might have a reward scheme for their highest performers that offers subsidised trips abroad.  The business might source the flights and the accommodation separately and combine those two elements, which are then offered to employees at a heavily subsidised cost. This would make the business the organiser of the “package”, and therefore potentially liable in the event of a claim.

Certainly I would advise an employee in such circumstances to bring a claim against the business under the old PTD regulations for the simple reason that the business and injured employee will most likely be in the same jurisdiction. This avoids the need for the injured party to litigate against a supplier who would be in a foreign country, which is a lot more complicated.

Why has the legislation been revised?

The rise of low cost carriers and sharing economy disruptors, such as Airbnb, along with the growth of the internet, has fundamentally changed the way consumers book holidays.   In response to this change in booking habits, it was proposed that the old PTD needed to be revised in order to modernise legislation so that it would continue to offer protection for consumers.  The definition of “package” has been extended as a result.

What do businesses need to know?

Unlike its predecessor, the new PTD no longer applies to packages purchased on the basis of a general agreement with a TMC for business travel. Essentially this means that businesses are now protected from liability as long as they have a contract in place with a TMC or business travel agency for the supply of their business travel requirements.

The rationale behind this is that business travellers working for large corporations who have such an agreement in place will not need the same protection as pure consumers.  Those businesses generally have other forms of protection in place for their staff that will be relied upon if problems arise while travelling (for example, comprehensive business insurance and other corporate resources which will be deployed for the benefit of the employee). Although this may expose companies to travel management fees, it will in turn ensure that a business will not be liable for the improper performance of the travel arrangements by one of the suppliers. This is likely to be infinitely cheaper than a business having to engage in litigation in order to recover compensation they have paid to an employee from a supplier who was at fault.

To use an example, if an employee  fell from a defective hotel balcony and suffered a spinal injury as a result, under the old Directive the business, if it is also the organiser, could be liable to pay compensation due as a result of the hotelier’s fault in not maintaining the balcony.   This could potentially run into millions depending on the seriousness of the injury.   If the business had a general agreement with a TMC which put together the travel arrangements, the New Directive would not apply to that trip.

This does not mean that a business can completely resolve itself from liability of course. If there has been any negligence by the business in relation to the travel arrangements then an employee may still be able to make a claim against an employer in appropriate circumstances. This could happen in such cases where an employee has been required to stay in a notoriously dangerous hotel while travelling for business and the employer has not undertaken checks to ensure that the accommodation was reasonably safe.  However, at least then the business is not bearing responsibility for the fault of a supplier under the travel contract over whom they have no control. 

If businesses want to find out more about what they need to be aware of, here are some useful resources:

www.gov.uk/foreign-travel-advice for up to date travel alerts per country

www.gov.uk/government/collections/overseas-business-risk

There are also many travel risk management companies that can help to provide training and other resources at varying costs to help protect your employees while abroad.

Katherine Allen is a specialist partner and overseas personal injury expert at law firm Hugh James

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