Tupe

[Tom D]

So, we tendered for a job where we were told TUPE might apply, the incumbent contractor had provided details of the wages of their employees which the winning bidder would have to employ and maintain. The 4 man tree squad were paid as follows: one man : £200 per day, one £144, one £124 and the trainee £80... So £548 a day plus overtime pensions and PPE Etc. on top of this a chip truck, chipper, tractor and roofmount and timber trailer were to be provided as well as the usual equipment. As anyone working in the industry knows those are very high wages, but not beyond reason.

 

It occurred to me that it is in the incumbent contractors interest to inflate their wages as far as TUPE is concerned since any other bidder tendering will have to add these figures in to their price. Because wages are confidential and can't be obtained under freedom of information neither the buyer or a rival contractor can know for sure if the stated wages are accurate.

 

In this particular case the incumbent contractor won the tender again (surprise surprise). We were not second so it wouldn't have made any difference to us, but I know that the price that we submitted was 30% higher than it needed to be in order to cover our TUPE obligation. Having spoken to the buyer to express my concerns they were unable to provide any evidence of the actual wages of the incumbent contractors. Sufice to say I have serious doubts that they are on annual basic salaries of £52500, £37584, £32364, even the trainee is on £20880. They also get time and a half overtime and double time on sundays.

 

I know these salaries are possible, but knowing that the price submited by the winning firm was not that much more than the £548 per day it seems unlikely that these are accurate figures. It is possible that the two higher salaries are the company directors, but if that is the case they will be taken as dividends and therefore not subject to TUPE.

 

We just have to take this on the chin but it smarts a little. Does anyone else have any experience of TUPE and or its abuse?

[Sussex Groundie]

Before entering the Landscape/Arb arena I worked for a Computer Maintenance Company 12 Office /workshops Nationwide 400 Field Engineers. I progressed to become a Business Analyst in the Costings Dept replying to Maintenance tenders.

 

Tupe can be and often is a bag of worms, you were not ment to win this one obviously but some companies are obliged to retender every 3-5 yrs.

 

I would have thought the saleries in your case were inflated by 50% or is that what they are paid "when they work". A 4 man team on PAYE fully supplied with equipment, tax, insurance, repairs and renewals, plus add 28% for extra staff to cover holidays and training days would have to bring in approx £500k-£750K per annum, I just do not think this is possible (or I need to put my prices up) !

 

We bought another Computer Maintenance company for £1 assuming £2-£3M Debts, turns out they were really losing £500k per week! The engineers (some been there 25yrs) were on 4 x annual Salary Redundancy, ouch! Always read the small print, luckily I was not involved in that transaction.

[Paul Jenks]

As said above, can of worms, nest of vipers, [insert metaphor here].

 

Directors can be on a normal salary just like everyone else. They may have changed their payment system purely for this exercise then switched back to minimum wage and dividends afterwards.

 

Anyone who regularly fills in PQQ, OTT and general tender documentation will know that a reasonable proportion is smoke and mirrors and/or lies. The bigger the operation the cleverer the wording.

 

I investigated buying a company a few years ago and TUPE was one of the fundamental negatives. That and I didn't trust the owner.

[Sleeches]

Couple of things you need to do -

 

1. Check their employment status. I don't believe that contractors are covered by TUPE (the "E" stands for Employment which is the clue). So they would probably not be covered by TUPE.

 

2. Get a lawyer to draw up the contracts which include represenations and warranties around the information provided to you. Plus an indemnity on those warranties with a hefty cap. It may be that they have mis-represented those salaries to you in which case you would have a claim against them post-transaction. Alternatively HMRC may come after them on their employment status as not true "contractors" and there will be a big PAYE bill and fine on the table - this is something you want the seller to take care of.

 

Don't forget that (subject to the correct notifications etc) you can just fire them on Day 1 and pay them statutory redundancy. If they want to apply for new jobs with you on more reasonable rates then fine.

 

Get lawyered up for this as the penalty for getting the process wrong is 13 weeks salary for each affected employee, and I can guarantee that the employees will also know this.

[ReubenHayes]

TUPE is a very difficult process to get to the bottom of, especially when its between private companies.

 

However, from you said above, there are a points to raise, how long was this 'job'? Under TUPE you have to demonstrate that the service they offer is over a certain percentage of their time.

 

Judging by the wage bills, that would be either a 4 man team, or 2 2 men teams (a question again to be asked about the amount of work available, or are they just trying to shaft any winning bid). It sounds very fishy and probably best you didn't get close to winning the contract. I know (as its starting to be raised where I work), that its nearly the end of a contracted service we manage. Over the last year there has been several changes in work staff (people who don't know what they are doing, unable to perform or older staff). Under the law they need to be there for a set time before they can be offered, so we are delaying the re-tendering the contract for as long as possible otherwise we could lumbered with them (at least until post retirement for some of them). Large companies are cleaver and will try every trick.

 

In your case, as part of the TUPE they would have had to show wages bills for all the workers, at which point you would have needed a legal team to sort through it all (costing time and expense) to get to the bottom of it, again probably a way of any other winning contractor being lumbered with a massive wage bill at the start in the hope it collapsed and thus revert back to the previous contractor. They probably were very over inflated and possibly also included a senior job role (possibly the owner of the other company, again a nightmare to run or manage).

 

Always useful to read exactly what the contract will be and drive by the contractors to see what they are up to before submitting a tender!

 

Will be interested to hear from others as well on their experience of contracts and TUPE.

[eagleye]

companies don't often TUPE over their best people they keep them and get shot of the wasters