TUPE. TUPE: what you need to know when outsourcing and planning for the end of the contract

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Leslie Daniels
6 years ago
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1 : what you need to know when outsourcing and planning for the end of the contract Daff Richardson Partner and Head of Employment law practice

2 Overview Entering into the contract: where does the risk lie? Entering into the contract: practical issues The end of the contract: what to think about

3 Outsourcing: where does the risk lie? Outsourcing/second+ generation contracting Service provision change

4 Service Provision Change Activities cease to be carried out by a person (a client) on their own behalf and are carried out instead by another person on the client s behalf (a contractor) Activities cease to be carried out by a contractor on a client s behalf and are carried out instead by another person (a subsequent contractor) Activities cease to be carried out by a contractor or a subsequent contractor on a client s behalf and are carried out instead by the client on their own behalf

5 Service Provision Change Contractor includes sub-contractors There must be an organised grouping of employees situated in Great Britain before the change that has as its principal purpose the carrying out of the relevant activities on behalf of the client A single employee can be an organised grouping

6 Service Provision Change Does not apply where the contract is for the supply of goods for the client s use Does not apply where the activities are in connection with a single specific event or task of short-term duration

7 Legal Issues All the transferor s rights, powers, duties and liabilities under or in connection with the transferring employees contracts, pass to transferee Acts or omissions of the transferor become those of the transferee

8 Legal Issues Hidden liabilities under occupational pension scheme (e.g. early retirement benefits) Compliance with obligation to inform and consult elected employee representatives Employee liability information Objections

9 Practical Issues Due diligence (where possible) Assess risk Pricing variations/structures does not apply (?) really does not apply?

10 Practical Issues Transferee will seek indemnities Pre-transfer liabilities In respect of failure to comply With consultation obligations In case of hidden employees Pensions? Transferor will seek indemnities Post-transfer liabilities Against objections for cause

11 Practical Issues Who holds the balance of power? Tailor the warranties/indemnities/other contractual provisions to your particular deal e.g. :- Is there a change of location? Will you have to contribute to the costs of any redundancies? Do you want to build in protection from redundancy?

12 The end of the contract: legal issues The activity ceases entirely: no transfer Consider if applies where things will be done VERY differently You take back the activity in-house You re-tender and there s a new supplier

13 The end of the contract: legal issues Who is assigned to the work? Who will transfer? watch out for late changes to personnel Employee liability information

14 The end of the contract: practical issues Contractual obligation for outgoing contractor to be co-operative Moulding the shape of the workforce to affirm or avoid No changes to personnel, terms of employment etc

15 The end of the contract: practical issues Severance payment contribution? What might the incoming supplier want?

16 The end of the contract: practical issues Second+ generation contract Risk that if exit provisions are inadequate, customer will be in a weak position Customer should have adequate indemnities in respect of pre-transfer liabilities and warranties as to employee liability information

17 Parting thoughts Plan ahead Prepare for the worst and hope for the best Be realistic about your bargaining position and the real scope of the deal and risk

18 Thank you Daff Richardson DDI: +44 (0)

Changes to TUPE and Pensions: the impact on contracting with Local Authorities. Amanda Harvey Partner Devonshires

Changes to TUPE and Pensions: the impact on contracting with Local Authorities Amanda Harvey Partner Devonshires Contracting with Local Authorities: Problem Areas Lack of certainty: does TUPE apply or