New practice note on employment protection clauses in NEC4 FMC

NEC published a free-to-download practice note in April 2023 on the inclusion of clauses relating to employment protection rights in the NEC4 Facilities Management Contract (FMC). It also applies to other NEC term contracts such as the NEC4 Term Service Contract (TSC).

Unlike most project contracts, which are one-off projects for a new or refurbished asset, facilities management and other term service contracts are often a continuation of an existing service. The client has, for example, an existing building or road, has had it maintained for many years and is now retendering the service for another period.

Employment protection laws

In many countries the employment rights of staff and operatives employed by a client or service provider are protected by legislation if their jobs are transferred or outsourced. In the UK this is the Transfer of Undertakings (Protection of Employment) Regulations 2006, often referred to as ‘TUPE’.

Such laws mean that employees involved in facilities management have the right to be transferred to a new facilities management service provider and retain their employment rights. This can have a significant impact on the commercial considerations of any prospective provider of facilities management services.

Incorporating clauses in FMC

A facilities management services contract therefore needs to be very clear where the risks and liabilities lie for employment protection rights. The new NEC4 FMC practice note gives guidance to clients and service providers on the issues to be considered and how employment protection clauses can be incorporated into the contract.