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FM Forum - Termination & TUPE
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FM Forum - Termination & TUPE

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  • 1. FM Forum Termination & TUPE Clare Reddy and Jonathan Carr 21 November 2013
  • 2. Termination & Facilities Management Clare Reddy 21 November 2013
  • 3. Termination for breach • Breach of a condition Entitlement to terminate • Breach of a warranty Remedy in damages only • Breach of an intermediate term Depends on the gravity of the breach • Period for remedy/ warning
  • 4. Termination at will • No breach required • Notice period • Duty of good faith did not apply to termination (TSG Building Services plc v South East Anglia Housing Ltd [2013]) • Reallocation of work to another contractor • Compensation
  • 5. Termination on insolvency • Insolvency not automatically breach of contract (Perar BV v General Surety & Guarantee Co Ltd (1994) • Not usually automatic • Beware the definition of insolvency
  • 6. Termination – other contractual • Break clauses • Failure to achieve KPIs • Change of control • Disposal of property • Other client/ project specific
  • 7. Termination at common law • Repudiatory breach Breach goes to the root of the contract Unequivocal acceptance of the repudiation Affirmation • Frustration External circumstances prevent performance as originally intended Further performance impossible, illegal or radically different from original intention • Beware getting it wrong!
  • 8. Termination - consequences • Express provisions • Appropriate to the reason for termination • Damages • Handover and information
  • 9. Thank you
  • 10. TUPE & Facilities Management Jonathan Carr 21 November 2013
  • 11. What is TUPE? • “Classic TUPE”: transfer of an business or part of a business to a new employer • This involves three elements: 1. an economic entity; 2. which transfers; and Company A 3. retains its identity following the transfer Company B Sale
  • 12. Service provision changes • Service provision change: There is an organised grouping of employees Situated in Great Britain immediately before the transfer Which has the principal Contractor A purpose of carrying out the relevant activities on behalf of the client Another person/company takes over responsibility for carrying out those activities Client Contractor B
  • 13. FM context – when is this relevant to you? • TUPE may apply when: FM currently done in-house is outsourced (1st generation outsourcing) FM services already outsourced to a contractor who loses the contract and a new FM contractor takes over (2nd generation outsourcing) FM services already outsourced to a contractor but client decides to take FM function back in house (insourcing) • Can potentially apply to the outsourcing/insourcing of a particular aspect of FM (eg security)
  • 14. Key ingredients TUPE more likely TUPE less likely • FM activities remain very similar – like for like swap, same site, similar staff numbers and skills required • There is a clear organised group of employees dedicated to contract/client/site • Activities materially change • Way in which activities performed changes • Contract fragmented and multiple new contractors • No organised grouping of staff (eg shared services model) • ‘Client’ changes at same time • One off/short term duration contract
  • 15. Who transfers • Employees & apprentices Employed by transferor (client or incumbent service provider) Assigned to the organised grouping ‘Immediately before’ the transfer Haven’t objected • Not agency staff or self-employed contractors (although consultants and contractors required provide their services personally may transfer)
  • 16. What transfers • Employment contracts • Continuous service • Union recognition and collective bargaining agreements • Liabilities relating to transferring employees • But not ... occupational pension rights (subject to some exceptions)
  • 17. Other features of TUPE • Consultation obligations (<90 days pay penalty) • Some additional dismissal protection • Changes to terms and conditions are difficult • Employees are not forced to transfer. They may opt out but generally no rights or payments if they do • Staff information sharing required by TUPE and usually by contract
  • 18. Key points to be aware of ... • Can defeat the point of client moving the contract • Potential for large redundancy bills if staff don’t transfer and cannot be redeployed. Think about: Seeking all parties agreement early on that TUPE applies Consider scope to run-down permanent headcount Budgeting for redundancy costs or agreeing cost sharing • Get information about transferring staff – contract terms, disciplinary records, • TUPE equivalent in other EU countries is different and service provision change concept doesn’t generally exist
  • 19. Contract tips and pitfalls Who is in scope? Limitations on flexibility to change or add staff Mirroring entry & exit terms Redundancy costs? What happens on your ‘watch’ is your responsibility
  • 20. The relocation problem • FM change on a site relocation may defeat TUPE (not the same activity) • Even if TUPE does apply, staff may not want to transfer to a new location – potential redundancies