This is the first presentation from Lewis Silkin's recent "Warranties and Indemnities" seminar on the 8th March 2012 by Julian Parry and Lucy Lewis. You can view the case study slides here: http://www.slideshare.net/LewisSilkin/lewis-silkin-whats-trending-in-tupe If you would like more information please get in touch. http://www.lewissilkin.com Julian Parry http://uk.linkedin.com/in/tupeguru Lucy Lewis http://uk.linkedin.com/in/lucylewis

1. Warranties and Indemnities –
What to Look Out For
Julian Parry and Lucy Lewis
Lewis Silkin LLP
8 March 2012

2. Scenarios
Business sale and purchase
Outsourcing – first time
Second generation outsourcing
Taking a service back in house

3. What role does your business play?
Seller
S ll
Purchaser
Client
New service provider
Replacement service provider

4. What should you be considering?
Commercial
position
Contractual position Legal position
Do you understand the liabilities,
liabilities obligations to inform
proposed agreement (BPA, and consult and provide
services agreement)? information
Due diligence
Buyer/transferee beware!

5. What to cover in the agreement
TUPE on
commencement
What happens to
unidentified Controls on assignment
employees of staff during
agreement/notice period
What happens to TUPE on
employees identified termination of
services

6. Understanding liability under TUPE
Transferring employees
Liability for existing claims transfers to transferee
Liability for not taking on or dismissing without ETO
Automatic unfair dismissal for transferee (includes dismissals by transferor)
Information and consultation obligations
Joint and several liability (13 weeks pay per affected employee)
weeks’
Liability for employee liability information
y p y y
£500 + per employee for transferor

7. Turning back the tide!

8. “Standard” commercial position
Standard
(If there is such a thing!) alters TUPE as follows:
th i h thi !) lt f ll
Seller/Client: Buyer/Supplier:
Pays salary/ Indemnifies
benefits to buyer/supplier
y pp Indemnifies
Pays salary/
ays sa a y/
transferring on seller/client on
benefits to TEs
employees commencement commencement
from transfer
(TEs) up to for TEs pre- for TEs claims
date
transfer date transfer claims from transfer

9. Standard
Standard” commercial position
On termination of agreement supplier employees may
agreement,
TUPE to new supplier or client (if service taken in house).
Supplier will: Client will:
Agree to pay
Indemnify (or procure
Indemnify y
Agree to pay client/replacement new supplier
against claims
employees to supplier for claims pays)
arising from
termination arising from employees
termination
date employees to from
date
termination date termination
date

10. “Standard” commercial position
Standard
Parties will comply with information and consultation obligations
under TUPE (and on termination the client will procure that the
new supplier complies)
Indemnify the other for failures
on their part leading to claims
p g Normally an indemnity for
y y
(and client to indemnify for failure by transferor to provide
failures by replacement employee liability information
supplier)

11. Other considerations
As few TUPE Ability to control
liabilities as numbers of service
possible provider’s staff on
services
i
C e
Client
wants
Service provider not to
Ready access to
dump staff into services
(extended) employee
or dismiss or change
information, for re-
their terms in run up to
tenders
termination

12. Other considerations
Cover for pre- Clarity
Cl it on whoh
existing claims is inherited
“strays”
Non-solicitation
of its (key) staff
Service Participation
by li t?
b client? provider consultation
prior to transfer
wants
As much control
Contribution to
as possible about
the costs of
who it assigns to
redundancies
the services

13. Case Study

14. Case study
Want t
W t to avoidid
Cleaning Lost Gateshead
taking on NUTS
Bank so don’t
12 cleaners need more employees with
employees good
1 janitor
p y
pay/benefits
Good pay and benefits
NUTS SCAM
Maintenance
Security: NUTS don’t want
Contractors “as
Group Poor and when”
when Group Poor
p
(untrustworthy) employees to
transfer

15. Thank you