UK Law and Practice Contributed by: Richard Brown, Louisa Chambers, Adam Wyman and Michael Ross, Travers Smith LLP
both entry and exit. It is often market practice for the indemnities on entry to mirror those on exit so that if, for example, the supplier has been indemnified for employment risks on entry into the outsourcing, they will agree to indemnify an incoming supplier against the same risks on exit. It is also very common for the outsourcing contract to include provisions regarding matters relating to employees during the term of the contract, including any restrictions on changes to terms by the supplier, requirements to provide a list of employees working on the services, and restrictions on changing the per - sonnel assigned to the services. Impact of Brexit The UK’s withdrawal from the EU has not resulted in any significant changes to the HR aspects of out - sourcings. That said, as noted in 1.1 IT Outsourcing , the introduction of the UK points-based immigration system post-Brexit has made recruitment of EEA staff more difficult and costly for UK outsourcing providers. In addition, following Brexit, the UK government has made a small change to the information and consul - tation obligation under the TUPE regulations (see 5.2 Role of Trade Unions or Workers’ Councils ). 5.2 Role of Trade Unions or Workers’ Councils Where the TUPE regulations apply, the outgoing employer (the “transferor”) must inform and consult with employee representatives about the transfer. Where the employer recognises a trade union, the appropriate employee representatives will be trade union representatives. If no trade union is recognised, the employer must either arrange for the election of representatives from the affected employees or con - sult with existing employee representatives where these are in place – for example, where there is a works council or other employee forum. The transferor must inform the employee represent - atives about the fact of the transfer, its timing, the reasons for it and the consequences for employees. Where the outgoing employer envisages taking any “measures”, it must also consult the employee rep - resentatives about those measures. The term “meas - ures” covers any changes to employees’ day-to-day
working lives, including changes to terms and condi - tions or working practices, or plans to make redun - dancies. To assist with the transferor’s consultation duty, if the transferee proposes any measures that would affect the transferred employees after the transfer, it must notify the transferor of the measures before the trans- fer. If any of the transferee’s existing employees will be affected by the transfer, the transferee must also con - sult employee representatives of its own workforce. These obligations historically applied regardless of the number of employees involved in the outsourcing. However, in the wake of Brexit, the UK government has changed the TUPE regulations so that employ - ers are now able to inform and consult employees directly on an outsourcing where there is no recog - nised trade union and either the employer has fewer than 50 employees or fewer than ten employees are affected by the transfer. 5.3 Offshore, Nearshore and Onshore Events such as the COVID-19 pandemic and the Russian invasion of Ukraine have prompted some businesses to reassess their reliance on global sup - ply chains with a view to simplifying them. In some cases, this has led to certain offshored activities being brought back onshore or prompted businesses to explore nearshoring (when previously they might have been more attracted by offshoring). However, much depends on the level of risk from hav - ing an outsourcing provider located in another jurisdic - tion. Most outsourcings are primarily focused on ser - vices, which in many cases can be provided remotely from another jurisdiction relatively straightforwardly, whereas businesses involved in physical goods sup - ply chains may have more concerns about increased risk as a result of the distances involved. Indeed, off - shoring remains an option that many customers are willing to examine, particularly where there are sig - nificant savings to be made on labour costs. Recent statistics suggest that offshoring has not declined in popularity – for example, in a survey of outsourcing intentions in 2023, 33% of businesses indicated that they would be looking at offshoring (as against 27% for nearshoring and 19% for onshoring).
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