When granting contracts, central and local government require the successful contractor to observe the principles of the Regulations, even in cases where there may be some doubt as to whether, on the usual legal tests, they actually apply ( Transfer of undertakings ). That means that the successful contractor will inherit the employees currently working in the area concerned, and must honour their existing terms and conditions. Further, the company will be required to make a specified standard of pension provision for the transferred employees, even though pension benefits are not transferred under the Regulations themselves (pensions). A company awarded a Government contract must also ensure that any new recruits it takes on to work on the contract are given terms and conditions that are, overall, no less favourable than those of the transferred employees and make a specified level of pension provision for them.
Companies that are considering tendering for Government contracts and so may be affected by these special rules can obtain further details on them from their Association.