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Re-organising the public sector

Public Service Transformation has been challenging local authorities to rethink their modus operandi. Frequently, this will involve reducing…

Those of us who work with the public sector cannot fail to have noticed that Public Service Transformation has been challenging local authorities to rethink their modus operandi and the skills they need in their newly reconfigured teams. Frequently, this will involve reducing headcount in some areas, merging or consolidating certain teams and services, or else hiring individuals to bring in new skills.

This is a challenging time for the public sector HR departments, as they try to walk the fine line between ensuring that any new structure is meeting the needs of their organisation, while ensuring that they are staying on the right side of the law, both in order to avoid the potential risk of liability, and also to ensure maximum buy-in to any changes from the employees on the ground.

Potential redundancies: are you consulting collectively?

HR departments should generally be familiar with the procedure of running an effective redundancy process, and the first port of call in any such situation will be the appropriate internal policy. There are still pitfalls to watch out for, however, particularly in relation to large-scale redundancies.

Most are aware that there is an obligation to consult with employees collectively where there are proposals to make 20 or more redundancies at one establishment within a 90-day period. There is then a sliding scale of the amount of notice required depending on the numbers at risk: For 20-99 redundancies in a 90-day period requires consultation to start at least 30 days before the first dismissal; and for 100 or more redundancies in a 90-day period, the consultation should start at least 45 days before the first dismissal.

In addition, you will also need to consider notifying the Secretary of State by completing an HR1 form. This is of vital importance as any failure to pre-warn the Secretary of State about collective redundancies is technically a criminal offence, and could leave employers liable for paying fines that, since 12 March 2015, have been unlimited in value. This notification requirement has been brought into sharp focus in recent months when, for the first time in over 20 years, prosecutions have been brought against the directors of a number of businesses that failed properly to notify the Secretary of State.

You should also allow plenty of time to consult with employees and to plan out a redundancy exercise in good time. It is crucial, however, to prioritise formal notification to the Secretary of State which can easily be overlooked at such a stressful and busy time.

Outsourcing: have you considered TUPE?

It is common in a restructuring or re-organisation exercise for management to consider the possibility of outsourcing certain teams or functions, and in these circumstances it is important for HR practitioners to be familiar with the operation of the TUPE Regulations.

Of course, it is well known that transfers of administrative functions between public bodies are exempt from the requirements of the TUPE Regulations, but this exception is usually interpreted very narrowly and, in reality, the Cabinet Office Guidelines which state that transfers should take place as per TUPE guidelines, even if the regulations themselves do not apply.

Unless a fairly clear-cut exception applies, therefore, it is always best to operate as if the TUPE regulations apply to the transfer. With that in mind, there are some issues that all HR practitioners should bear in mind:

Since 31 January 2014, Employment Liability Information, which includes details on all those employees affected by the TUPE transfer, must be provided at least 28 days before any transfer. It is always best practice to prepare this as soon as you are able to and, importantly, organisations should make sure that this information is kept up to date throughout the process, ensuring that employees no longer affected by any transfer are removed from the list.

Practitioners should also make sure they have a good grasp of any collective agreements that might cover affected employees, and they should be satisfied that they have a record of all terms and conditions covered by these agreements at the transfer date. If there are, say, payment increases that have been collectively-negotiated to occur in the future, these will no longer apply to the affected employees post-transfer, as the terms will be set in stone at the transfer date.

Additionally, it is now easier for organisations to change these collectively-agreed terms and conditions following a transfer. Organisations still do not have the right to "harmonise" terms and conditions, but they can change collectively-agreed terms, so long as 12 months has passed since the transfer and the overall changes are no less favourable to the employee. This is a useful tool for practitioners, particularly concerning relatively minor terms in the contract, but practitioners should think carefully about how any changes may negatively employees.

Each of these issues can involve a complex analysis of both the legal position and the factual situation behind the transfer, so HR practitioners should always consider seeking specialist advice before coming to a conclusion on any of these points.

A version of this article appeared in Local Government Lawyer.