Taking on new work – don’t forget the staff!

First of all, if you are taking over a management contract, 95 per cent of the time TUPE will apply. The most common reason for this is that an existing contract will cease to be performed by a contractor for a client and essentially the same services will be provided under a new contract by you (i.e. a different contractor) on that client’s behalf. This is known as a Service Provision Change.

However, if any part of this equation is out of kilter, take advice at the earliest opportunity as there may be some wriggle room to argue that TUPE does not apply – for example in Hunter v McCarrick the Court of Appeal confirmed that where the identity of the relevant client changes during this process, TUPE will not apply. Likewise, where it is proposed that the services will be materially different before and after the change, it may be possible to argue that TUPE should not apply.

Secondly, clarify at the earliest possible stage who will be transferring and what cost this will entail – ideally you would obtain full information during the tender process and bid accordingly, but try to obtain information as early as possible in whatever event.

The basic framework of information and consultation under Regulations 11 – 15 requires steps to be taken no less than 14 days before the transfer (and a penalty of up to 13 weeks wages per employee is the key risk of not doing so), but the earlier you can obtain information, the better placed you are to analyse and challenge it.

Any well-advised client will have a written outsourcing agreement with the incumbent contractor and any well drafted outsourcing agreement will require the incumbent contractor to provide you with information at an early stage. Such an agreement may also offer you protection as a third party (including indemnities against pre-transfer claims) - so get investigating.

On the same point, make sure that any outsourcing agreement that you sign up to offers no greater protection to a subsequent contractor than you received yourself from your predecessor.