RETENTION OF EMPLOYMENT MODELPOTENTIAL
Clearly, these are the most directly important
matters which will face Trusts, employees and private contractors.
There are a considerable number of the issues which we believe
will need to be addressed before embarking down this route. No
doubt many if not all have been considered during the past few
months but we believe it is necessary to address them again, this
time along with the private sector and the Trusts. These include
"Them and us"
Prior to the award of the contract to the private
sector, all staff worked for the Trust. Under the current proposal,
some staff would remain Trust employees while others would become
staff of the private contractor (PC). This is bound to lead to
a "them and us" culture which would destroy team spirit
and working relationships. This would become more pronounced as
secondees were offered promoted posts for which they had to become
employees of PC.
Inevitably, there is high turnover in blue-collar
staff. While it is intended that replacement staff will be secondees,
there may be many who do not wish to become public service employees,
thus the proportion of seconded workers (SW) could become increasingly
reduced over time.
Where there were large percentages of SWs and
PC staff, communication would become more difficult and complicated.
This has the potential to lead to mixed messages and misinformation.
This is not helpful in the context of a fast moving, frontline
Staff level appropriate for secondment
The initial proposal related to non-managerial
staff. Current debate with the trades unions centres round what
level of staff will second as opposed to transfer. Unison have
realised that many of their activists might transfer rather than
second and that this could weaken their power base. They are now
seeking to raise the level of secondees.
Reduction in employment protection
Whatever that level, promotion is going to result
in staff ceasing to be SWs and becoming employees of PC. They
will transfer with no employment protection and no TUPE rights,
because they are accepting a different job from that in which
they transferred. This will sour relations between the PC and
those workers and their trade union.
Disciplinary and grievance procedures
These would become much more difficult. New
PC employees would be treated differently from SWs. At least two
different sets of procedures would be required. If Trusts are
to retain the final appeal the manager would have no real control
or sanction over SWs. Sanction would be imposed by the employer,
placing the manager in an invidious position where there is a
dispute between employer and manager.
A further issue is the resolution of a grievance
raised by a SW against a PC manager. The SW is not an employee.
A further twist on this arises where the "manager" of
PC staff is a SW. Whose procedure prevails?
A further complication arises where a PC rejects
a SW for gross misconduct and the case is taken to an Employment
Tribunal. Who will be liable to pay any compensation awarded?
If it is the Trust will it accept the ruling or will there be
arguments about the actions taken by the PC?
TU recognition and union membership
One of the advantages to trades unions of TUPE
transfers is that recognition rights transfer with the staff.
This keeps up the level of union membership. Under the secondment
model, despite the staff remaining public sector employees, recognitions
agreements would not transfer. This could adversely affect union
There is an issue over who will hold staff records
for SWs. The Trust is likely to be reluctant to hand over its
records. Equally, the PC will have reservations about making its
records available to the Trust. Would there have to be duplicate
records? The Data Protection Act repercussions are not clear.
PCs will tend to deal with increases in staff
remuneration on a generic basis. NHS Trusts, on the other hand,
often have local practices and agreements related to specific
staff groups. The whole meaning of consultation and negotiation
would be diminished if the Trust were to negotiate a local pay
deal for catering staff when all the staff are working for a PC.
It would also create antagonism among other staff who were not
the recipients of the benefits of that deal.
Public sector staff enjoy substantial benefits
but these differ from those enjoyed by PC staff. There will be
unrest from SWs if they see PC staff receiving superior benefits.
Many PCs have employee share option or profit
sharing schemes. SWs would not be eligible to join them, which
will be another source of grievance.
Recruitment and Selection
How is staff recruitment to be managed? Whose
responsibility will it be? PCs are more aggressive and more innovative
in recruiting staffparticularly in times of labour shortage.
Indeed the need to recruit staff could be transformed into a proposal
to invest in new equipmententirely at the PC's discretion.
We have a concern that Trust HR functions will
simply "turn the handle" in recruiting these staff,
and that ultimately quality will suffer. There will need to be
an agreed timescale for recruiting new staff if PC is to be able
to meet the terms of the contract.
It is not clear who will make the assessment
of promotion prospects for SWs. Will it be the Trust, the PC or
a combination of both? Particular issues will need to be addressed
where an SW is offered promotion which will take that worker out
of the SW category to become an employee of PC. The SW will need
to be advised that no protection of employment rights (including
pension) will transfer and that PC normal terms and conditions
will apply. This could be a major disincentive to SWs, to their
detriment and that of service provision.
BSA is in detailed negotiations with Prudential
Corporation to set up a Group "GAD" Pension Scheme.
We have had a useful meeting with Bill Guy of HM Treasury and
Andrew Johnston, Deputy Government Actuary, at which much progress
was made on a number of technical issues. Subsequently, Inland
Revenue have agreed to waive their "top-slicing" rule
in respect of this scheme.
This approach, taken with our group proposal
on pensions would remove all but one of the concerns of the trades
unionsthat of continued employment by the public sector.
Our proposals on National Agreements and payment of trades union
dues will deal with the issue of continuing trade union membership
of transferred employees.
Vulnerability in reorganisations
Where there is a reorganisation during the lifetime
of the contract, PC staff can be moved round the company if there
are appropriate vacancies. This reduces the number of redundancies.
Such would not be the case for SWs. Should a reorganisation result
in less staff being needed to perform the contract. SWs would
be returned to the Trust which would have to find the alternative
employment or make them redundant. Since the service delivery
has been transferred to the private sector, opportunities for
alternative employment will be limited.
One of the main drivers in a PFI scheme is the
ability of the PC to innovate and to incentivise its staff. Financial
incentives play an important part in motivating staff to do better.
SWs will have little or no incentive to perform the tasks better
as there is no financial reward for doing so. Promotion will also
be little incentive as they would lose protection and would have
to become PC staff..
The straitjacket of public sector working practices
will stifle innovation. Tightly defined job specifications and
grading with lack of incentivisation do not promote a desire to
do things differently. There is security in familiarity. What
is the reward for trying something different?
Furthermore, the real difference between private
contractor and public sector management styles is that the contractors
are much more responsive to the needs of their employees. There
are conscious policies in place to develop close links between
the contract managers, and the workers. The removal of these links
will de-motivate the workforce.
Insurance and Health and Safety
There will be insurance and Health and Safety
issues around SWs using PC equipment. Who is the employer? Is
a SW an "employee" within the meaning of the relevant
Since it is proposed to include only "soft"
service staff in the current arrangements, the major risk under
the REM model will be in payment mechanism deductions for performance
rather than availability. While in certain situations the cleaning
or catering or portering staff can cause unavailability (eg through
late delivery of meals) the risk is considerably lower than that
for hard FM staff, eg central heating engineers. The risk to the
PC will relate to additional performance/availability deductions
which the PC will suffer as a consequence of not employing the
staff and having control to enforce performance.
One way to address this issue is to price the
additional risk. This will be difficult and is unlikely to offer
a value-for-money solution.
Another is to water down the payment mechanism
through relaxing response periods and KPIs. This is not a good
option, as it will impact on the quality of the services provided.
A further option is to increase the excusing
causes by obtaining relief from deductions in circumstances where
deductions are incurred as a result of the SW failing to act in
accordance with management instructions, or acting vexatiously.
This would be difficult to control and would be likely to result
in numerous disputes being referred to DRP, dependant on materiality.
Additionally, the project agreement will have
to address who will be responsible for SWs who cause damage to
the fabric of the building or to fixtures and fittings. For example,
who pays for damage to walls or doors caused by trolleys, or areas
which are persistently not cleaned leading to a rectification
requirement of premature decoration? These will have to be allowed
for in the life cycle cost or else a duty of care and risk profile
will be served on the Trust by the PC.
The only viable way to address these issues
would be through adoption of the "starter for ten" option
outlined in Annexe 2.
3. PAYMENT MECHANISM
Implementing the secondment approach as set
out on the "starter for ten" model does, as we have
shown above, logically exonerate the PC from any performance penalty.
PCs have shown themselves willing to work under penalty regimes,
but these are fundamentally incompatible with the secondment employment
In order to police effectively and fairly the
payment mechanism under any REM proposal, both the Trust and the
PC will need to have a full-time commercial team scoring points
off each other to ascertain who caused what, why, where and when,
by how much and to whom. This will take so much time to monitor
that neither side is likely to have the time to carry out the
recruitment, training and management process properly, leading
to a downward spiralling effect to a point where the contract
is in default.
In addition, PCs would require contractual protection
against any acts and omissions of the Trust, which are shown to
impact contractual performance.