On any TUPE transfer, one of the major TUPE risks for the transferee will be inheriting additional staff who had not been envisaged as transferring and, therefore, who have not been budgeted for.
The best way to cover off this risk is through an agreed list of Transferring Employees, coupled with a "wrong pocket" provision. This is a provision that, if any staff transfer across, other than the listed "Transferring Employees" (as defined), the transferee, having given the transferor, an opportunity to re-employ, is entitled to dismiss and to be fully indemnified against its costs of employing and dismissing such staff. An alternative is to merely include definitions for "Retained Employees" (staff to be retained by the transferor) and "Former Employees", (former employees of the transferor) and to include an indemnity against any claims from them.
Generally, it is difficult for a transferor to object to providing such an indemnity. This is because only those identified as assigned and, therefore, within the agreed list of Transferring Employees, should transfer and these will be the only employees for whom the transferee has budgeted. It is not unusual, however, in a public sector transfer, to find the public sector client will not warrant the accuracy of the list of Transferring Employees coming from its incumbent service providers and will not, whilst it might agree to a "wrong pocket" provision in relation to additional staff coming from it, agree to indemnify against the risk of additional staff transferring from incumbent service providers. Where this is the case, the new service provider should, to have some comfort regarding its costings, as an alternative explore obtaining provision for pass through of any increased costs as a result of additional staff transferring across.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
