The new policing system - employment issues
In the last article of a four-part series on the new policing system, Mark Fletcher and Patricia Critchley look at the employment issues raised.
The Police Reform Social Responsibility Act 2011 established each Police Crime Commissioner and Chief Constable as distinct legal entities capable of employing staff. All police staff employed by the various police authorities transferred to the PCCs in November 2012 by way of what is known as a “statutory transfer”.
This has the same effect as a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) with the effect that the contract of employment of each employee (and all rights and liabilities relating to those contracts) transferred.
The legislation envisages a second “stage 2” transfer taking place before April 2014. Such transfers will take place by way of Home Office approval to a transfer scheme submitted by the PCC. PCCs and Chief Constables are working together to determine which party should employ the police staff.
At the same time, each PCC is looking at its staffing structure in order to determine the best model to use. This may involve the transfer of employees to third party providers or to joint venture companies that are set up under a shared service or collaboration agreement. In our opinion, this type of restructuring would also give rise to a relevant transfer under TUPE. Further, PCCs and Chief Constables need to look at whether the current staffing structure really works for them and whether new staff need to be recruited and/or existing staff need to be retrained.
Inevitably there will be a transfer of police staff from the PCCs to the Chief Constables. This coupled with the fact that TUPE would also apply to other types of arrangement means that any PCC and Chief Constable needs to be fully aware of the consequences of TUPE applying.
Under TUPE, the new employer (known as the “transferee”) effectively “steps into the shoes” of the old employer (known as the “transferor”). Employees transfer on their existing contractual terms and conditions of employment (this can exclude certain practices and procedures that are deemed to be contractual by custom and practice). Employees transfer with continuity of service preserved and the transferee can inherit various liabilities and duties that are owed to the employees. Further still, union recognition and, with it, collective agreements also transfer under TUPE.
It may be difficult for the PCCs and Chief Constable to establish whether an employee should transfer depending upon whether or not they are “assigned” to the services that are transferring. Further, the PCCs and Chief Constables may both wish to call upon the services of the same employee going forward and so it will be difficult to determine whether that employee should transfer under TUPE. It may be that the PCC and the Chief Constable are able to agree a form of secondment model under which the employee is employed by one party but carries out services on behalf of the other.
There are other important considerations to be borne in mind when dealing with a TUPE transfer. There is currently an obligation on the transferor to provide what is known as “employer liability information” to the transferee (although this obligation is currently under review and may change when the government introduces changes to TUPE later this year).
There is also an obligation on both the transferor and the transferee to inform and, if necessary, consult with employee representatives of the workforce. This will be trade union representatives where the workforce is represented by a recognised union. It is important that this process is carried out properly as there are penalties that can be imposed upon both the transferor and the transferee if there is an inadequate information and consultation process. Rather unhelpfully, TUPE does not prescribe a timeframe under which the information and consultation process must happen but it is something that PCCs and Chief Constables need to be thinking about now with a view to starting as soon as possible.
Once employees do transfer, there is very little scope for the transferee to change the terms and conditions of employment of those who transfer and claims can be brought where the transferee proposes to or actually makes changes which are to the employees’ detriment. This is another important issue that PCCs and Chief Constables need to bear in mind.
Pensions considerations
Whenever the issue of transfer of public sector employees arises the issue of pension provision is never far behind.
From the viewpoint of current members of the LGPS, where a transfer scheme provides for employees to transfer across to the employment of the Chief Constable, they will see no change. The Police & Crime Commissioner and the Chief Constable are both “Scheme employers” in the same LGPS fund, so members will remain as active members in their current fund following transfer. The LGPS regulations will also automatically aggregate pensionable service before and after the change of employer, meaning that all of the member’s pre-and post transfer service in LGPS will be treated as a single period of service, and pre-transfer final salary service will continue to be linked to post-transfer salary levels
Effectively, therefore, staff will see a seamless transition. The same is likely to be true if staff transfer to the employment of the geographically-closest local authority. Where service provision is shared across a wider area, there may need to be a change of LGPS fund, but otherwise the effect on employees will be minimal.
Behind the scenes, however, there are some significant financial issues to consider. Aggregation of pre- and post-transfer benefits means that, by default, the whole of any existing deficit transfers to the new employer with the member. The Police & Crime Commissioner and the new employer will need to consider whether this is appropriate, or whether that deficit should stay with the Commissioner as current employer, or be shared between the two in some way. Actuarial input may be needed, which means talking at the earliest opportunity to the LGPS administering authority and their appointed actuary.
One other point to note is that support staff who are eligible for LGPS but have opted out will potentially need to be re-enrolled by the new employer following transfer, under the LGPS regulations as they currently stand. By including appropriate drafting in the transfer scheme, it may be possible to use the ancillary powers under Sch.15 to enable the new employer to rely on the existing opt-out, if this is likely to be helpful.
Thought also needs to be given to the implications of any restructuring of service delivery which is put in place as part of the wider context to the Stage 2 transfer.
For instance, if support staff are made redundant or dismissed on grounds of “efficiency”, this has potential pension implications. An employee in this situation who is aged at least 55 has a right to receive immediate access to their unreduced pension under LGPS; other benefits, such as added years or pension or lump sum compensation (which can apply equally to those who are not LGPS members), are in theory discretionary, but past practice and policy may mean that there is limited scope to refuse to make such awards. All these benefits have an associated cost to the dismissing employer, and that cost can be substantial.
Equally, if staff are going to be transferred out to the employment of a private sector organisation, the “Fair Deal” policy is likely to apply, meaning that the transferring public sector employer needs to ensure that the new employer provides continued access to LGPS or (at present) a broadly comparable arrangement. Either option places financial risk on the private sector employer, which will no doubt want to discuss risk-sharing options – or pass the cost directly back to the Commissioner or Chief Constable as the public sector employer. Considering in advance what kinds of options are acceptable and being upfront about these at the start of the outsourcing process can reap dividends by reducing delays and cost down the line.
Mark Fletcher is a partner and Patricia Critchley is a senior associate at Eversheds. Mark can be contacted on 0845 497 7595 or by This email address is being protected from spambots. You need JavaScript enabled to view it..
The previous articles in this series can be viewed by clicking on the following links:
- ICT and commercial agreements, by Nigel Sternberg.
- Schemes for transferring staff and assets, by Frances Woodhead.
- Land and property arrangements, by Frances Woodhead.