54.13  Calculation of Adjustment

In calculating any adjustment to be made to the Unitary Charge pursuant to clause 54.11:

(a)  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 Relevant Transfer Date, fewer suitably qualified persons available than are required in order to establish the Proposed Workforce and to the extent that the Service Provider has employed replacement staff on equivalent remuneration and has used all reasonable endeavours to mitigate all expenses in recruiting and employing such replacement staff;55

(b)  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 Service Provider has been, or will be, compensated as a result of any indexation of the Unitary Charge under this Contract;

(c)  to avoid doubt any changes in costs which fall to be dealt with under clause 54.11 and which arise from a Change in Law shall be dealt with in accordance with the provisions of clause 54.11 and shall not be taken into account for the purposes of clause 44 (Change in Law);

(d)  no adjustments under clause 54.11 shall be made in respect of overpayments made by the Service Provider or a relevant sub-contractor to Relevant Employees which arise from reliance on the Final Employee List to the extent that the Service Provider or a relevant sub-contractor is unable to correct overpayments in respect of continuing employment having taken reasonable steps to do so;56

(e)  if there are underpayments by the Service Provider or a relevant 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 Unitary Charge in respect of all such liabilities of the Service Provider or relevant sub-contractor for all such underpayments which are retrospective (save that any such liabilities which relate to the period prior to the Relevant Transfer Date shall be dealt with in accordance with clauses 54.6 or clauses 54.18(a) to 54.18(c) (inclusive)) and an appropriate increase in respect of such liabilities of the Service Provider which represent ongoing costs ;57

(f)  in order to prevent duplication, no adjustment shall be made under this clause 54.13 if any indemnity given by the Authority under any other provision of this Contract would apply; and

(g)  no adjustments under clause 54.11 shall be made to the extent that any payment is made to the Service Provider or a relevant sub-contractor under Regulation 12 of TUPE;

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55  If insufficient numbers of staff to establish the Service Provider's projected workforce are in place at the time of service transfer, this does not reduce the Service Provider'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 Service Provider 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.

56  The Service Provider may have made binding contractual commitments, having relied in good faith on information provided by the Authority

57  This could mean that the Service Provider 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.