Do the same duties apply under TUPE in a second-generation outsourcing situation?
Yes, the same duties apply in a second-generation outsourcing situation, for example in relation to informing and consulting employees and providing employee liability information. A second-generation (or subsequent-generation) outsourcing occurs when a contract to provide a service comes to an end and the client changes to a different service provider, for example by retendering a cleaning contract. If TUPE applies in this kind of situation, the employees of the outgoing contractor (the transferor) will transfer to the new contractor (the transferee). In these circumstances, there is no commercial relationship between the two contractors, which can make it difficult for the transferee to obtain information from the transferor about the employees, and for the transferor to obtain information about any measures that the transferee intends to take.
In this situation both the outgoing and incoming provider have a contractual relationship with the client. Ideally the contracts will include provisions requiring the contractors to comply with their duties under TUPE. Failure to comply with these provisions could have expensive ramifications if it amounts to a breach of the contract with the client.
If the transferee is unable to obtain employee liability information from the transferor, it may request indemnities and warranties from the client in respect of the transferring employees and/or adjust the price of the service contract to reflect potential liabilities.