1.4 Employment Costs
1.4.1 The Authority has supplied to the Contractor the information, as at the date of this Agreement, which is contained in Appendix 4 (the "First Employee List") regarding the identity, number, age, sex, length of service, job title, grade and terms and conditions of employment of and other matters18 affecting each of those employees of the Authority and of any Sub-Contractor of the Authority who it is expected, if they remain in the employment of the Authority or of the Sub-Contractor of the Authority as the case may be until immediately before the Service Transfer Date, would be Relevant Employees but the Authority gives no warranty as to the accuracy or completeness of this information.19
1.4.2 The Authority shall supply to the Contractor an update of the First Employee List at [three monthly] intervals from the date of this Agreement and an updated list ten (10) Business Days before the Service Transfer Date. The Authority shall also supply to the Contractor within five (5) Business Days after the Service Transfer Date information, which was correct as at the Service Transfer Date, in respect of the Relevant Employees on all the same matters as should be provided in the First Employee List. This list is the "Final Employee List" [and where there is more than one Service Transfer Date the "Final Employee List" means each list so prepared in respect of each Service and at each Service Transfer Date]. The Authority gives and shall give no warranty as to the accuracy or completeness of any information contained in [any update of the First Employee List or in] the Final Employee List.20
1.4.3 Without Prejudice to Clauses 1.4.1, 1.4.2 and 1.5, the Authority shall or shall procure if it has the contractual or legal powers to do so and shall otherwise use all reasonable endeavours to procure that every relevant Sub-Contractor of the Authority shall:
(a) provide the Employee Liability Information to the Contractor at such time or times as are required by TUPE; and
(b) update the Employee Liability Information to take account of any changes as required by TUPE.
The Authority gives and shall give no warranty as to the accuracy or completeness of the Employee Liability Information supplied by the Authority or any of its relevant Sub-Contractors.
1.4.4 The Contractor has provided to the Authority, and the Authority has agreed, the details set out in Schedule [•] (Workforce Information) which show, in respect of each of the Services, the following information:
(a) the workforce which the Contractor proposes to establish to provide the Services (the "Proposed Workforce") classified by reference to grade, job description, hours worked, shift patterns, pay scales, rates of pay, terms and conditions and pension arrangements;21 22
(b) the monthly costs of employing the Relevant Employees who are expected to be engaged in the provision of the Services. These costs (the "Remuneration Costs") have been calculated on the basis of (amongst other things) the information contained in the First Employee List;23 and
(c) the costs, including any lump sum payments, which have been agreed between the Parties for the purposes of any reorganisation which may be required to establish the Proposed Workforce or a workforce which is as close as reasonably practicable to the Proposed Workforce [(including but not limited to costs associated with dismissal by reason of redundancy or capability and costs of recruitment)]. These costs (the "Reorganisation Costs") have been calculated by the Contractor and the Sub-Contractors on the basis of (amongst other things) the information contained in the First Employee List.24
1.4.5 If at any time (including, for the avoidance of doubt, after the submission of the Final Employee List) the Remuneration Costs and/or the Reorganisation Costs require to be adjusted on account of any differences between the information contained in the First Employee List and that contained in the Final Employee List, or on account of any inaccuracies in or omissions from the information contained in the First Employee List or the Final Employee List then (subject to clauses 1.4.6, 1.4.7 and 1.4.9) there shall be a corresponding adjustment to the Unitary Charge to compensate for any such difference.25
1.4.6 If the circumstances described in clause 1.4.5 arise:
(d) in circumstances where there are more Relevant Employees than shown on the Final Employee List then the parties shall discuss the implications for the provision of Services; and
(e) the Contractor and the relevant Sub-Contractor shall take all reasonable steps to mitigate any additional costs and any adjustment to the Unitary Charge shall be calculated as if they had done so.
1.4.7 In calculating any adjustment to be made to the Unitary Charge pursuant to clause 1.4.5:
(f) no account shall be taken of a decrease in the Remuneration Costs or Reorganisation Costs to the extent that it arises from a reduction in the number of Relevant Employees or their whole time equivalent such that there are, immediately after the Service Transfer Date, fewer suitably qualified persons available than are required in order to establish the Proposed Workforce and to the extent that the Contractor has employed replacement staff on equivalent remuneration and has used all reasonable endeavours to mitigate all expenses in recruiting and employing such replacement staff;26
(g) to avoid double counting, no account shall be taken of any change to the Remuneration Costs or the Reorganisation Costs to the extent that the Contractor has been or will be compensated as a result of any indexation of the Unitary Charge under this Agreement;
(h) to avoid doubt any changes in costs which fall to be dealt with under clause 1.4.5 and which arise from a Change in Law shall be dealt with in accordance with the provisions of clause 1.4.5 and shall not be taken into account for the purposes of clause [ •] (Change in Law);
(i) no adjustments under clause 1.4.5 shall be made in respect of overpayments made by the Contractor or a Sub-Contractor to Relevant Employees which arise from reliance on the Final Employee List to the extent that the Contractor or the Sub-Contractor is unable to correct overpayments in respect of continuing employment having taken reasonable steps to do so;27
(j) if there are underpayments by the Contractor or a Sub-Contractor to Relevant Employees, whether claimed or established as unlawful deductions from wages or as a breach of contract, which arise from reliance on the Final Employee List, there shall be an immediate increase to the [Interim Service Payment or] Service Payment [(as the case may be)] in respect of all such liabilities of the Contractor or the Sub-Contractor for all such underpayments which are retrospective (save that any such liabilities which relate to the period prior to the Service Transfer Date shall be dealt with in accordance with clauses 1.3.1 or 1.6.1 to 1.6.3) and an appropriate increase in respect of such liabilities of the Contractor which represent ongoing costs28;
(k) in order to prevent duplication, no adjustment shall be made under this clause 1.4.7 if any indemnity given by the Authority under any other provision of this Agreement would apply; and
(l) no adjustments under clause 1.4.5 shall be made to the extent that any payment is made to the Contractor or Sub-Contractor under Regulation 12 of TUPE.
1.4.8 Either party may propose an adjustment to Unitary Charge pursuant to clause 1.4.5 by giving not less than [ten (10)] Business Days notice to the other. Each party will provide or procure the provision to the other, on an open book basis, access to any information or data which the other party reasonably requires for the purpose of calculating or confirming the calculation of any adjustment pursuant to clause 1.4.5.
1.4.9 In relation to all matters described in clauses 1.4.6 and 1.4.7 the Contractor and the Authority shall, and the Contractor shall procure that the relevant Sub-Contractor shall, co-operate with the other or others and take all reasonable steps to mitigate any costs and expenses and any adverse effect on industrial or employee relations.
1.4.10 The Authority shall and the Contractor shall and shall procure that each and every Sub-Contractor shall take all reasonable steps, including co-operation with reasonable requests for information, to ensure that each and every Relevant Transfer pursuant to this Agreement takes place smoothly with the least possible disruption to the services of the Authority including the Services and to the employees who transfer.
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18 The list would normally show:
1. Staff Reference Number
2. Date of Birth
3. Age
4. Job Title
5. Start Date
6. Continuous Service Date
7. Contracted Hours
8. Gender
9. Site
10. Department
11. NI letter (A or D)
12. Scale and Point
13. Salary
14. Superannuation (including type of Scheme, contribution rates, length of scheme membership etc)
15. Allowance/deduction code.
N.B. This is not necessarily an exhaustive list
19 The information provided by the Authority prior to financial close is almost certain to be inaccurate by the time Service Transfer occurs, if only because there are likely to be changes to the workforce in the meantime, for example because of staff turnover. The document does not, therefore, focus on the giving of warranties in support of the information given. Authorities should however allow that the Contractor's price can be adjusted in a way which reflects the differences between the information about the Authority's workforce given to the Contractor when its bid was priced (this can be adjusted prior to financial close to reflect up to date information) and the actual workforce which the Contractor inherits.
20 Clause 1.4.5 allows for further adjustments to be made where information contained in the final list is incorrect.
21 This should be reviewed against the bidding assumptions in respect of the project.
22 These details are taken from the Contractor's final bid. Authorities and their advisors should ensure that sufficient details are included in bids to ensure that all the assumptions made by bidders are transparent. Otherwise, it will be difficult for Authorities to audit the adjustments which are to be made to the Unitary Charge to reflect changes in the employee information in the Final Employee List.
23 In other words, these costs are the allowance made by the Contractor in its bid for continuing payments of salary, NI, pensions contributions, etc to the workforce it proposes to establish to provide the Services.
24 These costs are the non-recurring costs of establishing the Contractor's workforce. These might include, for example, possible redundancy costs if the workforce which the Contractor expects to inherit from the Authority does not match the required profile. The drafting is reasonably wide, although it is a requirement that both parties are agreed as the extent, and methodology of calculating, the Reorganisation Costs, and Authorities and their advisers may wish to consider carving out some costs on a project specific basis. NB - it is assumed for the purposes of this document that any re-profiling of the workforce is carried out by the Contractor after the Service Transfer Date. If it has been agreed that the Authority will undertake this responsibility, the wording may need review.
25 This is how the Contractor is compensated for any mismatch between the information it was given about the workforce when bidding and the correct information based on the actual workforce at the time of service transfer.
26 If insufficient numbers of staff to establish the Contractor's projected workforce are in place at the time of service transfer, this does not reduce the Contractor's staff costs, because additional staff will have to be recruited to fill the gaps. If there is re-profiling before Transfer at the request of the Contractor or if other changes have been included in pricing assumptions then this Clause should be amended to reflect costing assumptions. NOTE: If bids have been invited on the basis that the Authority will assume costs of redundancy this Clause will need to be developed to reflect the bid.
27 The Contractor may have made binding contractual commitments, having relied in good faith on information provided by the Authority
28 This could mean that the Contractor will recover the cost of higher salaries due to successful equal pay claims brought by transferring employees. The parties should discuss and agree the risk in this regard.