Thomson Snell & Passmore were contacted by an agricultural sector client that had recently acquired a horticultural research charity. The insolvent organisation had historically taken on 92 Department for Environmental, Farming & Rural Affairs (DEFRA) employees via a TUPE transfer in 2004.
DEFRA had given a partial indemnity in respect of redundancy and a lump sum entitlement arising from membership of a pension scheme analogous to the Civil Service Pension Scheme. This indemnity was novated to the client in 2016. These employees had generous redundancy and early pension provision benefits under old civil service pension entitlement.
As part of restructuring, the client had made several of these employees redundant and called upon the DEFRA indemnity, which DEFRA had paid. The employees’ lump sum and redundancy rights had crystallised under the 2004 TUPE transfer. However, later DEFRA argued that rights were non-contractual and subsequent civil service collective agreements affected the employees and refused to meet the indemnity liabilities.
Nick Hobden provided detailed advice on technical legal TUPE issues and contractual custom and practice evidence required, while members of the employment team provided ‘on the ground’ assistance at the client’s offices to identify former employees who could rely on custom and practice.
Nick Hobden presented the client’s case to DEFRA and the Government Legal Department at a joint meeting, successfully demonstrating that the client’s interpretation of the former employees’ rights was correct. Nick then successfully secured DEFRA, Cabinet Office and HM Treasury approval for substantial drawdowns against the indemnity.
For the sake of the research charity’s financial situation it was critical that it was able to mitigate the financial risks obtaining the £274k DEFRA drawdown under the novated indemnity. Nick was also able to obtain confirmation that all subsequent cases by the client would be similarly dealt with by DEFRA, avoiding future dispute and costs.