Management Contracts, Contract Notices and TUPE
Under s91 a management contract is a contract between an existing manager of the premises (manager party) and another person (contractor party) Any existing management contract is one that subsists immediately before the determination date (where there is no dispute about entitlement) or is entered into during the period beginning with the determination date and ending with the acquisition date.
The RTM company will either continue with the services of the existing contractors or tender for new ones. Whilst those contractors need to be provided with enough notice of the impending transfer of management it does not fall to the RTM company to notify them – under s92 this remains the responsibility of the current landlord. If he agrees that the RTM Company has the right to take over then it is his duty to serve 2 types of notice – a contract notice and a contractor notice.
The contract notice has to be served on the RTM Company and include the following information:
- The particulars of each existing contract and the name and address of the contractor;
- A statement advising the RTM company to contact any contractors whose services it wants to keep.
When serving the contractor notice, the landlord doesn’t have to provide a copy of the contract, just inform the RTM Company that it exists and who the party is. The Contractor Notice must include the following information:
- The identity of the relevant contract;
- A statement that the right to manage is to be acquired by an RTM company;
- The name and registered address of the RTM company;
- The acquisition date;
- A statement advising that any contractor who wishes to continue to provide services to the building under the new management must contact the RTM Company.
- That the contractor who receives the contractor notice must send a copy to any sub-contractors.
These must be no later than is ‘as soon as is reasonably practicable’ after the determination date, which is the date specified in the Notice of Claim for the landlord to serve his counter-notice. If however he disputes the claim then the date is the final date of the LVTs determination, or if he later agrees in writing then it is the date of that agreement.
TUPE: Transfer of Undertakings (Protection of Employment)
The RTM company will also need to be aware of the Transfer of Undertakings (Protection of Employment) Regulations 2006. TUPE is designed to protect the rights of employees when a transfer situation arises, ensuring that the terms and conditions of employees are preserved, with continuity of employment. Whether TUPE is applicable will depend on the particular facts of the case, and where a building is served by employees of the landlord or management company, it is advisable that specialist advice be sought.
We skipped these steps as we had no freeholder to carry them out.