As a law firm specialising in the cleaning sector, we regularly consider issues around changes of contractor faced by cleaning entrepreneurs. In the anonymised case below, I sketch where the pain points lie. In this article I also indicate on which points the CAO should be amended to prevent this kind of issue, and, for as long as the CAO has not been amended, how you as a cleaning entrepreneur could prevent these problems yourself.
Introductory problem case: “If only we had never signed this new assignment agreement”
In a private re-tender, you as an entrepreneur win a site, and of course you’re pleased to have gained more revenue. You sign the assignment agreement with your new client. The assignment has been “awarded” within the meaning of article 38 of the CAO for the cleaning and window-cleaning sector, and the change-of-contractor clause with its time limits applies from that moment. You duly wait to receive the personnel data from the losing party within five working days after the award has been communicated by the client to the losing cleaning company. You then receive this data much later than expected, and it turns out there are large discrepancies in the hours the staff work at the site compared to the awarded assignment. There are also substantial CAO travel allowances that were not clear beforehand. To make matters worse, it turns out there is a sick employee among them whom you must take over under article 38(2), because that employee will have been sick for less than 26 weeks on the date of the change of contractor. Naturally, you recalculate the expected higher staff and reintegration costs (your occupational disability insurance does not cover continued wage payment for this sick employee). And what comes out at the bottom line? You are going to make a loss on this assignment, and not a small one either. But you have also signed a one-year contract with the client. You deeply regret having accepted this private re-tender. So now what?
What about the exchange of information under article 38 of the CAO?
In the case above, the underlying legal problem is that, as a candidate contractor, you are not allowed to inspect the (anonymised) personnel data of the incumbent cleaning company before the award of private re-tenders (under €500,000). You are only entitled to that data under article 38 of the CAO after you have signed the assignment agreement. That means that during the quotation phase you can only guess what the staff costs will be that you will have to pay after the takeover. In effect, that is a black box, and in my view that really should not be the case. Every contract negotiation, whether inside or outside the cleaning sector, should be able to rely on a transparent and complete exchange of information. That is also how a fair contract negotiation gets underway, and a balanced contract that both parties remain satisfied with for years to come! That is what sustainable contracting really looks like, and all employers and employees in the cleaning sector certainly have a need for that continuity.
Can I demand an amendment to the assignment agreement, or can I still get out of it (and thereby out of the takeover obligation under article 38 of the CAO)?
This is of course the key question you should ask yourself if you find yourself in this situation. The best option is to amend or annul the agreement on the ground of mistake regarding the facts and information surrounding the re-tender. Why? Because the agreement can then be reversed as if it had never been concluded, or amended into an agreement with a higher contract sum that you would actually have signed given the known staff costs.
That annulment or amendment is important because article 38 of the CAO imposes a takeover obligation on you as soon as the assignment agreement is signed. The employees and the losing party have, under the CAO, an independent claim for wages and damages to hold you to that. Moreover, you would rather not get caught between the client on one side, demanding performance of the cleaning assignment and the employees, and the losing company on the other side, demanding wages/damages.
Unfair difference in exchange of personnel data information between small and large re-tenders
Annulment or amendment of the agreement for small re-tenders.
Whether you can annul on the ground of mistake is a good deal more complex for smaller re-tenders in the cleaning sector. Why? Because the client simply does not have the personnel information. And you cannot demand it from the incumbent cleaning company before the award either. After all, at that stage it still concerns secret and confidential business information. The client can only give you data and characteristics about the site, so that you can calculate the number of hours needed to carry out the cleaning. If you are then mistaken about a sick employee or the hours the employees actually work there, the client generally cannot do much about that. They often simply don’t know, and it’s not really their concern — after all, it’s not their staff. It may be possible to annul the agreement if it turns out that both parties were so mistaken that they would not have entered into the agreement, or would have amended it, had they had that information. That, too, remains dependent on the facts and circumstances and the specific division of the duty to inform and to investigate between the parties on both sides.
Annulment or amendment of the agreement for large re-tenders.
For large re-tenders above €500,000, this issue of mistake is less complex, because the CAO imposes a pre-contractual duty to inform on both the tendering client and the losing cleaning company, to make the personnel data available in advance to the competing parties in re-tenders. If it later turns out there are major discrepancies between that information and the personnel data subsequently sent by the losing company under article 38 of the CAO, it is easier to rely on mistake. The assignment agreement with the client can then be annulled, and the takeover obligation under article 38 of the CAO then lapses too. The cleaning assignment then falls back into the lap of the client and, potentially, the incumbent cleaning company. After all, the client can then also annul its termination.
Request for compensation for disadvantage before annulling
It is important to add here that your power to annul may lapse if, under Section 6:230(1) of the Dutch Civil Code, the agreement is amended in such a way that the disadvantage is “adequately” remedied. So always first ask the client, subject to a reservation of your right to annul, to increase the assignment sum by an amount X, so that your higher staff costs are “adequately” compensated. For example, you could ask for compensation for the sick employee’s wage costs for a certain period. These are matters that are sometimes agreed with the client.
#Practical tip: First, make it a condition to the client, for smaller re-tenders during the quotation phase, that they agree to request all anonymised data and information they have about the incumbent cleaning company’s staff and to share it. Second, include a legal reservation in the assignment conditions regarding the actual personnel data and costs, and build in an advance compensation obligation. We can help you with the precise wording in the terms and conditions.
Last resort: immediate termination
Another option besides annulment is always termination of the agreement. But then the agreement does need to include a right of termination. That is why you should always check the agreement. Under the law you naturally also have a right of termination, but as a contractor that is fairly complex and comes with a number of conditions. It is therefore better to include a contractual right of termination in the agreement that deviates from that.
The whole issue with termination is that, as the new cleaning entrepreneur, you must first take over the employees under article 38 of the CAO anyway. After all, you terminate afterwards, i.e. after the assignment agreement has come into existence. Until termination, it exists, and as you know, at the moment of award you must fulfil the obligations of article 38 of the CAO and therefore take over the staff. So upon termination, the staff will in any case first come into your employment. But on the other hand, after termination, the staff then transfer again to the new cleaning entrepreneur who has won the assignment following the re-tender.
It goes without saying that this route is undesirable and complex, and causes a great deal of unrest and cost for all parties.
#Practical tip: Make sure you have good termination clauses in your assignment agreement and/or terms and conditions. We can help you with the precise wording of these.
Questions or advice?
The corporate lawyers of The Legal Company specialise in employment law, corporate law, contract law and privacy law for the cleaning sector. Do you have questions about the above, or need advice or support? Then contact us by emailing info@thelegalcompany.nl or calling 020-345 0152.
Nothing is as changeable as legislation and regulations. Please note that our blogs may no longer reflect current legislation and regulations and may therefore be outdated. If you have questions or a problem relating to this blog, or wish to obtain legal assistance, please contact us.
