THE Salvation Army was last night accused of “corporate muscle-flexing” after a bruising employment tribunal left a small charity facing ruin.

The 700 Club, which provides accommodation for homeless people in Darlington, is facing a bill in excess of £100,000 after a tribunal in Newcastle found in favour of the Salvation Army.

The charity used legislation designed to protect workers in the event of a corporate takeover to transfer 18 of its staff to the 700 Club.

Reverend Dr John Elliston, who formed the 700 Club, said the Salvation Army could wipe out his organisation.

“This judgement is the last act in a saga of corporate muscle flexing – it is about money not justice,” he said.

“I hope anyone reflecting upon this outcome will, given the Christian provenance of the Salvation Army, take due note as they seek funding for their good works.”

The two charities had both operated homeless hostels in Darlington before last July when Darlington Borough Council chose to reduce the number of beds for the homeless by about a half.

Following a tendering exercise, the council offered the contract to the 700 Club.

The Salvation Army’s facility at Tom Raine Court closed, but its staff did not receive any redundancy package because the London-based charity insisted that the Transfer of Undertakings (Protection of Employment) regulations, known as Tupe, applied. Yesterday, tribunal judge Gerald Johnson agreed.

The 700 Club must now either pay off its new staff or employ them.

Dr Elliston said the legislation undermined the principles of the Government’s flagship Big Society concept by putting smaller organisations at a disadvantage when competing with larger counterparts.

“At a time when Government is urging a greater dependence on voluntary organisations, this judgement must stand as a cautionary warning,” he said.

“Any organisation that says yes may quickly realise that the chalice they now hold is a poisoned one.”

During the hearing, the 700 Club was accused of naivety over dismissing the possibility that Tupe regulations applied.

James Cornwell, counsel for the Salvation Army, said a letter had been sent by Darlington Borough Council stating that Tupe would likely apply in the event of a successful tender.

Dr Elliston said the charity was advised by its legal team that Tupe would not apply.

Andrew Twineham, employment law specialist and partner at Jacksons law firm, in Stockton and Newcastle, said Tupe could be a nightmare for small businesses and charities such as the 700 Club.

He said: “It may deter otherwise worthy and competent businesses or charities from pitching in for this kind of work.”

Darlington MP Jenny Chapman said: “All that is going to happen now is a small, local charity is under significant threat. It is not yet known if they can even begin to meet these new obligations.”

Former Tom Raine Court employee Dave Metcalfe welcomed the findings, but said: “Why did Darlington Borough Council accept this tender in the first place? It beggars belief.

Somewhere along the line, the council has to be held responsible.”

A borough council spokeswoman expressed concern at the outcome of the hearing.

“The tendering documents gave clear indications of the responsibilities that would be taken on by any successful organisation tendering for the contracts,” she said. A spokesman for the Salvation Army said the charity now felt vindicated in taking its stance.

He said: “As there remain further issues to be determined by the tribunal in relation to our former employees and the 700 Club, we do not consider it appropriate to comment in any further detail at this stage.”

A hearing has been scheduled for early next month to establish how much each of the 18 claimants will receive.