Ensuring High Quality Public Services

Ensuring High QualityPublic Services

recognising the role of the workforce in thefuture of outsourcing

KINDLY SUPPORTED BY:

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Ensuring High Quality Public Services: Recognising the role of the workforce in the future of outsourcing

ABOUT THE IPA

Acknowledgements

The case studies were researched and written by HannahJameson, IPA research manager. The author would like tothank the members of the steering group and those fromthe case study organisations who generously found timeto provide the information necessary for the study.

Unison and the Centre for Public Service Partnershipswould wish to thank Serco and Compass for sponsoringthe study; the IPA for undertaking the research andproducing the report; and to those who contributed to thecase studies . Special thanks are due to Hannah Jameson.

The IPA provides research and consultancy to helporganisations develop new ways of working, based oncollaboration and trust, that improve the well being ofall employees and their experience of working life, andlead to more productive outcomes for the organisation.

The IPA publishes research to help inform public andpolicy debates on the workplace and working lives.

The IPA is a not-for-profit organisation and registeredcharity.

IPA42 Colebrooke RowLondonN1 8AFwww.ipa-involve.com.

Publication date: 11th October 2011

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This report looks at 6 case studies exploring a range ofoutsourcing practice. At a time of severe cost pressure thefindings of this report are a timely reminder that a race tothe bottom does not benefit anyone, and that outsourcingcan produce higher quality public services when there isgood workforce practice and the workforce is fullyengaged in procurement, service design and delivery.

It is clear that reputable employers, employees and theirrepresentatives are all determined to find ways in whichquality of services can be maintained in the comingmonths and years. This report, we believe, goes some wayto demonstrate the dangers and advantages involved inoutsourcing.

The development of outsourcing

2010 marks the thirty year anniversary of the start ofsubstantial public sector outsourcing in the UK. From alimited practice in construction, maintenance and highwaysit has grown to an industry absorbing a fifth of total UKgovernment expenditure, employing hundreds ofthousands of staff across the country, in almost every publicservice.

There are now few local authorities, health trusts,government departments or agencies which do notprocure some of their services externally. governmentpolicy has long promoted public service delivery throughthe third sector, social enterprises, co-operatives, privatesector businesses as well as commercially driven publicsector bodies. All the major political parties advocate thispolicy to some degree. The period of the New Labourgovernment witnessed increased outsourcing, and anextension of its application into new areas in criminaljustice, health and education. The new coalitiongovernment has already made clear its commitment togreater outsourcing of, and a diversity of supply of, publicservices.

The trend to outsourced provision has accelerated in recentyears as public bodies responded to new financialpressures and following the government’s ComprehensiveSpending Review announcement on October 2010 there islikely to be a further substantial increase as public sectoragencies look to private and third sector providers to helpdeliver the major cost savings demanded by Review.

Whilst in many contracts outsourcing has delivered servicetransformation and efficiencies, experience has shown thatthe act of outsourcing itself does not always or necessarilydeliver these ends. Bad practice such as poorly structureddeals, badly defined specifications, the pursuit of the lowestprice, weak client/contractor relationships poor workforcepractices – including poor terms and conditions, andauthoritarian management and ineffective staffconsultation or communication has often underminedpotential gains.

The replacement of the compulsory competitive tenderingregime by a best value approach in 1997 was designed torecognise that a simple lowest cost approach underminedthe potential for positive service transformation as well asreducing the pay, conditions and engagement of staff.

The challenge now for government and other public sectorprocurers, third sector and private sector contractors and

other external providers, the workforce and the public alikeis to ensure that cost pressures do not undermine thequality of service and that positive service transformationremains at the heart of any outsourcing.

There is already anecdotal evidence that some publicbodies are:

• Unilaterally seeking to change contracts and pay less forspecified services especially where the provider is a thirdor community sector organisation

• Drawing up procurement strategies which would awardshort term contracts based solely on the lowest pricerather than service quality or defined outcomes

• Looking to encourage contractors to consider how theyreduce the terms and conditions for the staff employed todeliver public services, for example by circumventing thelegal requirement of the Transfer of Undertakingsregulations (TUPE) or avoiding pensions responsibilities

While this may seem superficially attractive in the shortterm to organisations faced with major reductions inincome, the consequences of a move away fromcontracting based on positive service outcomes tocontracting based simply on price would be harmful to allthe stakeholders concerned. It would damage:

• Public service procurers, because in a democracy theblame for any decline in service quality will ultimately restat their door;

• Contractors who have invested in good employmentpractices would face a damaging reputational risk froma race to the bottom;

• The workforce, who would be de-motivated anddisengaged;

• And above all the customers and consumers of services –the public - faced with poorer quality services, at a timewhen expectations of and demands on services are attheir highest.

To avert these dangers, we believe it is timely to reflect onsome of the lessons learned from the experience ofoutsourcing.

Those delivering the best public services in Britain todayknow that having a fairly treated, well-managed andengaged workforce is fundamental to achievingimprovements in service quality and how vital involvingand supporting staff through change is to achieving servicetransformation. It is important that public servicecommissioners continue to place this at the centre of theprocurement process if we are to deliver better quality aswell as better value for money. And it is important that asthe government reviews existing regulations and guidanceit takes this understanding into account.

Project rationale

This project arose out of a shared concern between private,public and third sector public services organisations, thatas we move into this new economic and political era webuild on the knowledge and best practice that has beenaccumulated. An initial seminar brought together manystakeholders from the public, third and business sector as well as trade unions, policy researchers andcommentators; a steering group of project sponsors

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then commissioned the Involvement and ParticipationAssociation (IPA) to produce a number of case studies tolook in depth at the relationships between good workforcepractice, the involvement and engagement of staff, andhigh quality public service outcomes.

The principles

The central finding of the case studies is the strongrelationship between good employment relations andworkforce practices, and high quality public servicedelivery. Those providers that treated their workforce fairly,and engaged and involved them and their representatives,were often better able to implement change effectively,meeting service user and purchaser needs. Goodrelationships with unions helped build trust betweenemployer and employees, which was particularly importantat the point at which new employers took over a contract.These case studies also show workforce and trade unionrepresentatives actively involved in change andmodernisation, creating more responsive and moreefficient services. At the same time several case studies alsoshow the difficulties of maintaining high quality publicservices when workforce conditions are undermined,relationships with the workforce and their representativesbreak down, and a two-tier workforce emerges. We hopethese case studies will be read by all interested parties.

The project sponsors suggest that the lessons from thesecase studies and many other similar studies over the yearscould form the basis for a set of best practice principlesagainst which procurement procedures could be designedand outsourcing delivered in today’s public service market.At the heart of these principles is an acknowledgement ofthe importance of the workforce in achieving high qualitypublic services, and the value that trade unions can bring,particularly in managing change as well as the need for

the public sector and employers to respond flexibly toincreasing public expectations at the same time as publicservice budgets decline. Indeed many of these principlesapply to directly public sector managed services and thoseprovided in other sectors. The principles include thefollowing:

• Public value and public service quality will only bemaximised when service providers and employees areengaged appropriately in strategic commissioning andfully focussed on the needs of service users

• Staff need to be empowered, supported and trained askey contributors in service planning, design andmonitoring services; well supported through change; andfully engaged in service delivery

• Employment standards and practices should reflect thebest across sectors and markets

• Staff and their representatives should be involved in allmajor decisions including procurement andcommissioning decisions about who will provide services

• Staff and trade unions should be consulted and involvedthroughout the commissioning and procurementprocesses and should work with providers,commissioners and procurers to use their experience toensure high quality public services

• Public sector procurers should continue to place goodworkforce management practices at the heart ofcontracting

• All providers should fully engage with staff and theirrepresentatives in developing, managing and deliveringservices.

We look forward to discussing these principles with all thestakeholders, as well as government, at the earliestopportunity

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CASE STUDY 1

Serco and Norfolk and Norwich University Hospitals NHS Foundation Trust

Background

NNUH had outsourced facilities management servicessince 1995 and over the following six years a series ofcompanies were awarded the contract. The relatively highturnover of contractors reflected some of the difficultiesthey had in delivering the service. Union officers and trustemployees reported a lack of experience in operating inhealth services, differing management cultures, resistancefrom staff and poor relations with the workforce asreasons why the quality of the service was often poor, andultimately contracts failed during this period. In the first 9months following the initial outsourcing, 50 per cent ofthe facilities management staff had left the organisation.

In 1999 Octagon and the Trust put the contract out totender to find a new company to provide the soft facilitiesmanagement services at the new hospital site once it hadopened. The hospital was the first PFI hospital built andwas a high prestige project.

Octagon and the Trust involved the unions throughout theprocurement and tendering process, for example, invitingthe companies bidding for the contract to present theirproposals to staff representatives. UNISON branch officerfor contractors, Terry Davies, was also invited to sit on thepanel with the Trust to interview the prospectivecontractors. Davies notes that Serco’s commitment topositive relations with the union was reassuring, but theirclear vision for how the company could not just deliverthe service, but play a role in improving the health of thelocal community, encouraged Davies to believe that therecould be a values fit between the employees andcontractor. The staff and their representatives were givena third opportunity to be involved in shaping the contractwhen they were asked to input into the service levelspecifications.

Once Serco had been awarded the contract, theyapproached the unions, including AEEU, UCATT, GMBand UNISON, to discuss establishing a recognitionagreement. The focus of this agreement from the unions’perspective was the harmonisation of the 27 differentterms and conditions that were in place over a two yearperiod. Serco agreed to move towards harmonised termsand conditions as soon as was affordable and to honourthe terms and conditions of the transferring staff. Theyalso recognised the value of union membership for goodemployment relations and agreed to promotemembership of the unions through distributing literatureto all new employees. The unions agreed to work for thesuccess of the company and ensure that there was

minimal disruption to the service. The recognitionagreement was signed in 2001. At the same time thecompany approached the UNISON branch officer, TerryDavies, to take on the full time union convenor role,funded by Serco. He agreed on the condition that hiscontract acknowledged his responsibility to the workforcecame before his responsibilities to the company.

This recognition agreement and the approach to workingthat it represents is seen as an exemplar in the field. Theunion convenor has worked with Serco at other sites tohelp develop their employment relations in a similardirection.

Approximately 550 people were transferred to Serco atthe beginning of the contract, with a variety of terms andconditions. The union and company had agreed to worktowards the harmonisation of the terms and conditionsover a three year period, but by 2004 Agenda forChange had been implemented for all staff directlyemployed by the NHS changing the focus of negotiations.

The contract workforce wanted equal pay to directlyemployed NHS staff and the union entered discussionswith the company. Serco argued that these changeswould have been unaffordable at the time, and wereunwilling to enter into an agreement while talks weretaking place between the government, CBI and BSA onpossible legal changes affecting the pay of the contractworkforce. The UNISON branch balloted members onindustrial action in 2005. The two parties went to ACAS,negotiated and went through binding arbitration. Shortlyafter, the Department of Health, the major contractorsand the trade unions issued a joint statement committingthem to address the pay disparity between directly andindirectly employed staff working in the NHS, by ensuringthat the contractors would provide terms and conditionsthat were no less favourable than those in the nationalagreement, known as Agenda for Change. Theagreement expected the costs of the increase in hourlypay, holiday and London weighting to be shared betweenthe NHS and contractor.

Shortly after this Serco and the unions agreed a phasedintroduction of the two-tier workforce agreement, withstaff gaining Agenda for Change rates of hourly pay inthe first year, sick pay in the second year, and antisocialhours enhancements in the third year. Many staff alsoreceived back pay.

The union has now been asked by Serco to take part injoint training for Serco managers on Agenda for Change.

Serco has operated the contract to deliver soft facilities management services at Norfolk and Norwich University HospitalsNHS Foundation Trust (NNUH) since 2001. The Trust is based within the very first PFI hospital which is owned by OctagonHealthcare which opened in the same year. Serco is a subcontractor of Octagon.

The contract is market tested every five years. The first market test took place in 2006 and the contract was awarded toSerco. The same procedure was repeated in 2010 and Serco was awarded the contract for the third time.

The original contract was for soft facilities management, which has been expanded over the life of the contract to includehard facilities management and retail. The services now provided by Serco include: Maintenance, grounds maintenance,domestic and portering, catering, car parking, security, laundry, waste disposal and retail. The workforce has alsoexpanded, and approximately 650 people now work on the contract.

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CASE STUDY 1 CONTINUED

Performance

During the life of the contract Serco has consistently met itscontractual obligations. Moreover, surveys carried out bySerco show that customer satisfaction and advocacy atNNUH is among the highest of their contracts.Performance was initially monitored through a site servicesteam which carried out regular inspections with the powerto withhold payments to the contractor if standards werenot met. This approach was found to be ineffective,encouraging a focus on identifying errors rather thancreating more effective ways of delivering the service. TheTrust, unions and contractor therefore developed analternative approach based on self-monitoring.

The contractor also collects data on various aspects ofworkforce performance, including retention, sicknessabsence and an employee engagement survey. From 2007the data shows a 2.5 per cent decrease in the sicknessabsence rate to 4.94 per cent. This compares with anational average of 6.9 per cent at the end of 2009 forsupport staff in the NHS.1 Over the same period voluntaryresignation rates have decreased 9 per cent to 13 per cent,against approximately a 20 per cent industry average.Workforce representatives interviewed for this study suggestthat the impact of receiving Agenda for Change rates ofpay had a significant impact on retention, placing thecompany’s rates of pay well above the average in the localeconomy for equivalent jobs. The employee engagementsurvey is relatively new and has yet to build up enoughdata to allow for comparisons, but it shows particularlyhigh scores on the employer’s commitment to health andsafety, employees’ understanding of their job and thebusiness and their belief in the quality of the service theyprovide.

Analysis

Serco has recently been awarded the contract again,without it going out to tender. Although they recognised thechallenges, those interviewed for this study all viewed thecontract as a broad success. Several factors were seen asparticularly important in ensuring the quality of theservices.

Firstly, all parties recognised the importance of apartnership approach in ensuring the success of thecontract. Partnership was seen by several interviewees asthe product of the gradual evolution of thecontractor/client/workforce relationship since contracting-out began at the NNUH, and the relationship most likely to

deliver good services for patients. A partnership approachrelied more on the quality of the relationships builtbetween individuals from each party than the specifics ofthe contract document.

This was seen as particularly necessary given the difficultyof anticipating at the beginning of a contract all that theTrust would require from the service over the life of thecontract. In reality, innovation, regulation and changingpractice in health services mean that facilities managementservices have to adapt too. Therefore, Serco and the Trustemphasise the value of their relationship, goodcommunication and involvement, which enablesimprovement and adaptation to take place during the termof the contract.

According to the assistant director of nursing a goodrelationship between the Trust, contractor and workforceensures that problems are resolved before they reach acritical level. A culture of involvement is made even morenecessary by the PFI structure, which introduces anotherpartner into the relationship. Serco, as a subcontractor ofOctagon, does not contractually have a direct relationshipwith the Trust, except through Octagon. However,regardless of the formal relationship, all parties see closeinvolvement as beneficial to the quality of the service.Structures have been created to support this approach. Forexample, a facilities management group which includesrepresentatives from Octagon, Serco, the Trust and unionsis in place to resolve issues that are escalated up from thefront line. Informal involvement is also widespread, andthe Trust encourages Serco as well as the unions tocontribute to a variety of committees and working groups.The assistant director of nursing was asked by Octagon tocontribute to the market test for the facilities managementcontract.

With considerable experience in the health market, Sercorecognise that their commercial success is dependent onthe quality of the service provided by their workforce. In amarket as competitive as health and where information isreadily shared between Trusts, service providers rely ontheir reputation to grow their business. According to DavidFox, Serco director of HR, integrated services, thecompany’s research shows strong correlations betweenclient satisfaction and workforce satisfaction. It is assumedthat satisfied staff are engaged and perform better,delivering a better service and acting as advocates for theemployer. The company therefore aim to pay theiremployees market rates, rather than the lowest rates, buildrelationships with the workforce representatives andencourage employee engagement.

1 The Information Centre for Health and Social Care, Sickness absence rates in the NHS: October-December 2009 experimental statistics, (April 2010)

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CASE STUDY 2

Veolia Waste Services at Westminster City Council

Background

The contract for waste, recycling and street cleaning atWestminster had been contracted-out for some years.This was one of the first services to be contracted-outunder CCT, and by 1996 was being operated by MRS.Despite the contract being having been operated byseveral different companies up to that point, theworkforce still retained a core of employees who hadbeen transferred over from the local authority when theoriginal contracting-out took place.

The previous employer had not recognised a union, butVeolia agreed an informal recognition agreement withina year. This recognition agreement was formalised in2009 when UNISON and the company signed a nationalrecognition agreement that also included a specificrecognition agreement for Westminster. The agreementstates the company’s preference for dealing with a singleunion, and for employees to become and remainmembers of that union. According to the union convenor,Colin Staplehurst, the company and managers werefamiliar with working with unions which helped inestablishing good working relationships early on.

All those interviewed for this study emphasised the valueof the informal approach to relations with the unionfavoured by company managers, showing flexibility ontime off and training time for representatives. ScottEdgell, contract manager for Veolia, acknowledged thevalue of well trained representatives and confirmed thecompany’s willingness to allow time off for training inorder to achieve that. The convenor is given one day perweek for union duties, and other representatives aregiven time off as requested.

From the company’s perspective, the union plays animportant role in improving health and safety across theworkforce and helping to manage change. The longcontract periods make it inevitable that the company willhave to respond to changes in service demand andspecification during the contract, requiring somemeasure of flexibility from the workforce. For example,carbon emissions and environmental impact have grownconsiderably as policy priorities for Westminster Council,which has led to the introduction of new technology anddifferent vehicle rounds by Veolia.

To facilitate good relations and joint working betweenthe two parties the company established a monthly forumwhich brought together a union full time officer, unionconvenor and health and safety representatives with thecontract manager, operational manager, and health andsafety manager to address a range of operational andstrategic issues, for example contract changes, changesto working practices and size of workforce. The forumalso provides an opportunity to address issues that arise

in the course of the day to day operations. However,urgent problems were discussed by telephone in betweenmeetings.

Other means of involvement included the JointNegotiating and Consultative Committee and theLondon wide and national Veolia trade union forumwhich brings together all of the unions representing theVeolia workforce. Several attempts had been made toestablish depot level forums. The union had been keento find ways of involving street cleaners, who tended tobe less unionised and are largely made up of migrantlabour. However, high rates of turnover and differingcultural attitudes to unions and workforce participationmade this difficult.

The union had not been involved in the drafting processfor the recent bid, nor had the Westminster Councilbranch been involved in the tendering process. The fulltime UNISON officer, Laura Butterfield, acknowledgedthat this would require further skills development on thepart of lay representatives. UNISON is now rolling outtraining on commissioning and procurement. Thecompany admits the highly competitive field in whichthey operate makes sharing information during thebidding process difficult.

Over the course of the contract the union has focused onharmonising the terms and conditions of the workforce.A core of the workforce remain on TUPE contracts andterms and conditions, while new starters were employedon Veolia contracts, and a number of existing employeeswere employed on contracts in place from previouscontract operators. This meant that there werediscrepancies in various terms and conditions includingsick pay and hourly pay.

The demographic composition of the workforce haschanged significantly over the last fifteen years which hascreated a greater variety of preferred working patterns.The pay structure had previously been based on anhourly rate and an attendance bonus designed toencourage employees to accept less popular shifts. Witha more diverse workforce, this was no longer necessary.The union and company therefore began to worktowards designing and implementing a new pay structurewhich better reflected the new working environment. Theparties agreed a two year deal whereby attendancebonuses would be abolished, and staff would receive a4.5 per cent pay increase. These changes took place aspart of the process leading up to the new contract.Progress was made on harmonising terms and conditionsincluding equalising entitlements to 6 weeks sick leaveon full pay. By September 2010 the workforce will be onbroadly similar contracts.

The strong working relationship between UNISON andthe company meant that the UNISON full time officer, at

Veolia Environmental Services has operated the waste, recycling and street cleaning contract at City of WestminsterCouncil since 1996, serving over 250,000 residents and 221 miles of streets. The contract was awarded again to Veoliain 2010 for a 7 year period, with the option to extend for a full 14 years. The contract is worth £518 million, or £37million per year.

The contract provides street cleaning, refuse collection, recycling and auxiliary services, including park maintenance,across the borough.

Approximately 800 people are employed by Veolia on this contract.

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CASE STUDY 2 CONTINUED

the request of members within Veolia, was prepared towrite a letter on their behalf to Westminster council insupport of Veolia’s recent bid for the new contract in2010.

Performance

Veolia was awarded the contract from 2010, indicating a certain level of satisfaction on the part of WestminsterCouncil. Data gathered over the period 2008-2010shows an average of level of 32.2 missed refusecollections per 100,000, and 20.2 missed recyclingcollections per 100,000. Customer complaints for refuseand street cleansing have fallen over the period;complaints for recycling have shown a modest increase.Employee absenteeism per annum averages 13.45 daysover period, although there are signs that this isdecreasing in 2010. Annual employee turnover hasfallen dramatically; from 34.03 per cent in 2008, to12.71 so far in 2010. Health and safety has alsoimproved, with the total number of accidents falling by 9 per cent in 2009, and a further 12 per cent in the firstsix months of 2010.

Analysis

Veolia has been awarded the new contract fromSeptember 2010 for seven years, with the option to

extend for a further seven years. The constructiverelationships between the union and company havehelped to manage change effectively, introducing newtechnology and working practices, new working patterns,contracts and pay structures. These changes have had animpact on the ability of the company to meet thechanging priorities of Westminster Council includinglower carbon emissions, fewer missed collections, andgreater efficiency leading to lower overall costs.

The company’s experience of working in partnership withunions meant that even before a formal recognitionagreement was signed, the company accepted the role ofthe union in representing the workforce, allowed themtime to fulfil their duties and created structures throughwhich to involve them. The company sees the value ofwell trained representatives both in improving health andsafety and addressing the strategic and day to day issuesfacing the company.

The effective relationship has brought other benefits tothe workforce including English for Speakers of OtherLanguages training which was arranged by the unionwith the cooperation of the employer and offered toemployees. Gradual harmonisation and the movetowards one contract has removed divisions in theworkforce, and the new pay structure means thatemployees receive more predictable pay, for example,removing the attendance bonus has meant thatemployees no longer lose pay when on annual leave.

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CASE STUDY 3

Dimensions Learning Disability Services in Cardiff

Background

Dimensions had been looking to gain a presence in Walesfor some time, and the reorganisation of services in Cardiffpresented an opportunity.

Four different private and third sector organisationspreviously ran the services in the area of Cardiff awardedto Dimensions in 2007. These legacy organisationsdiffered in size and their workforces varied between 9 and77 employees at the time of transfer. These serviceproviders had delivered services in Cardiff for aconsiderable amount of time, and were well established inthe region.

For many of the staff, Dimensions was unknown as anemployer, and the merger of several differentorganisations represented a considerable change. Thepriority for both Dimensions and the existing workforcewas to ensure that the transfer was as seamless as possibleand that continuity was maintained for the clients and theirfamilies. Therefore establishing early communications withthe workforce was important to reassure them and informthem of Dimensions’ intentions.

Some of the previous employers were somewhat reluctantfor Dimensions to begin making contact andcommunicating with the transferring workforce before thebeginning of the new contract, but Dimensions organised aseries of open days off site for the workforce to give staff theopportunity to find out more about the organisation and askquestions. Staff were also offered one-on-one consultationsto address any concerns they had, and staff from otherregions who had transferred to Dimensions spoke to thenew Dimensions employees. Union officers and lay officialswere invited to the open days and given the opportunity toattend the Dimensions joint consultative committee beforethe contract began. Open days were also organised forclients and their families; for many families, this was the firstopportunity they had had to meet one another.

Dimensions already had a recognition agreement withUNISON, and once the contract had been awarded, thenational officer helped to establish relations with otherofficers in the region. For Executive Director of People andOrganisation, Andy Donelan, Dimensions and UNISONhad forged a relationship based on a mutual interest inprofessionalising and improving standards in adult socialcare. For a large organisation spread over a widegeographical area, the union provides another means ofcommunicating, engaging and reassuring the workforce.According to Donelan, the fact that UNISON had apresence in all the legacy organisations provided acommonality among the new workforce and helpedDimensions as they sought to bring staff together in thenew organisation.

Under the recognition agreement, a joint negotiatingcommittee was put in place for bargaining around terms,conditions, policies and other employment issues alongwith national joint consultative committee. The service inCardiff was the first Dimensions service in Wales and soDimensions established a regional consultative group forWales, designed to resolve issues locally and also passrelevant matters onto the JCC.

Staff are employed on approximately 5 different contractsand their terms and conditions remain the same underthe TUPE arrangement. Some alterations have beenmade, for example to sleeping over allowances, wheresignificant differences existed in the rates paid by theprevious employers. Staff who gain promotion, or whoare employed as managers are placed on Dimensionscontracts. Discipline and grievance and promotionpolicies are set by Dimensions.

Shortly after the transfer had taken place, managersreceived induction training covering values, policies andsystems.

Analysis

One of the biggest concerns of the workforce during thetransfer was the need to maintain continuity of service forthe clients. Dimensions acknowledged this and sought toestablish communication channels with the workforce earlyon to reassure them that any change would be gradual.The hesitancy of the previous employers to allowDimensions contact with the transferring staff made thisprocess more difficult. Dimensions facilitated contactbetween existing Dimensions staff and the transferringstaff, and between union representatives in Dimensionsand the transferring union representatives, to help buildtrust. Dimensions employed experienced managers fromthe previous services to retain knowledge within the neworganisation.

Although Dimensions aimed to ensure change wasgradual, they did introduce some changes designed toimprove services. For example, shortly after taking overthe contract, Dimensions established a regional advisoryforum. This brought together a number of stakeholdersincluding the local authority, housing association, clients,families, support workers and managers to produce anannual plan. The forum continued to meet every threemonths to review progress against the plan.

The relationship with the union at national level helped tosupport relationships between regional and local unionofficers and representatives and the workforce.

Dimensions is a third sector organisation providing services to support adults with learning disabilities living in grouphomes. It delivers services in local authorities throughout England and more recently, Wales.

In 2007 Cardiff undertook a reorganisation of their services for adults with learning disabilities, and put many of thesecontracts out to tender. Dimensions was awarded the contract for one of the 6 localities, delivering services to, andmanaging, 15 group living homes each with between 2 and 4 residents. The contract was initially for four years, with theoption to extend for a further year. Approximately 95 staff TUPE transferred to Dimensions.

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Case study 4

Barnet and Chase Farm NHS Trust, Barnet Hospital and Medirest

Background

Medirest had been running the soft FM contract at Chase Farmfor several years when the contract for Barnet hospital went outto tender. Compass Group UK and Ireland, the parent companyof Medirest, therefore already had established relations with theunions at the Trust and also with UNISON at a national level,including a national recognition agreement. UNISON provideda statement of support to be included in Medirest’s bid.

Before the date of transfer, Medirest ran a number of roadshows to provide staff with information about the new employer,and a one to one meetings with all staff to answer questions anddiscuss their role. The unions were also present at the roadshows. According to the operations director, Scott Teasdale,these events played an important role in reassuring staff andaddressing any uncertainty.

The union had wanted to implement the Code of Practice forsome time, and by 2008 had began discussions with Medirestregarding their ambition to see contract staff on terms andconditions that were equivalent to Agenda for Change.Discussions then took place between UNISON, the trust andMedirest. The Trust agreed in principle and negotiations beganon how to implement the changes. By August 2008 the unionballoted their members and the workforce agreed to a threeyear phased implementation of the terms and conditions.

Once the agreement was reached, Medirest worked with theunion to send out joint letters to the staff informing them of thechanges. A UNISON representative also worked with theMedirest HR manager to carry out the job matching. Managersacknowledged that involving the union in the process helped tobuild employees’ trust in the process. As a result, the processwent smoothly and there were few objections. Those appealsthat did arise were heard by a joint panel of Medirest managersand UNISON representatives.

The first phase of the agreement came into force in April 2010,when the workforce was moved onto Agenda for Change ratesof pay. The employer notes that this had a significant impact onretention and increased applications for vacancies, allowingthem greater choice during the selection process. Staff turnoverhad previously been between 40-50 per cent per annum, butfollowing the change it fell to between 10-15 per cent. As wellas reducing recruitment costs, this has also increased theaverage length of employment and therefore the skillsdevelopment of the workforce. Staff satisfaction has alsoimproved.

According to Medirest and UNISON the close cooperationbetween them during the negotiation and implementation of theagreement helped to build better relationships between the two,increasing contact and putting in place relationships that havesince helped to address day to day issues. Monthly meetings

take place between managers and union representatives,although all parties interviewed for this study report goodinformal relations too. UNISON has since established a jointforum with Medirest to discuss issues across contracts.

As well as working with the union, Medirest has also created anemployee forum in order to better communicate with staff.Approximately 8 volunteers from across the service attend bi-monthly meetings to receive information, raise questions anddiscuss current issues. Volunteers are given training oncommunication skills before they begin attending meetings. Theunion representatives have also been invited to attend.

Since taking over the contract Medirest has implemented anumber of changes to the systems, products and processesused. Alongside this, all staff now receive induction training, andan online training system has been introduced for mandatorytraining modules. An NVQ programme is also in place.

Much of the monitoring of the contract is done through self-inspection with supervisors carrying out weekly audits, as well asjoint audits with ward managers once per month. The companyreports that they have good relationships with the trust and thatthey regularly exceed their targets.

Analysis

Both the company and the union had a joint interest inimplementing the Code of Practice at Barnet hospital, improvingterms and conditions for all staff. They were able to worktogether to communicate and gain the support of the staff,implement changes and manage any issues that arose from thechanges. UNISON local representatives, as well as regional fulltime officials, supported the process to completion.

Introducing improved terms and conditions, equivalent toAgenda for Change, not only directly benefited staff, but it alsohelped to strengthen relationships between the union, employerand trust. Union representatives gained valuable experience ofpartnership working and improved communications with theirmembers. Union membership has also increased. The indirectbenefits of improved terms and conditions, such as higher ratesof retention, have meant that the employer has gained morefrom its investment in training and skills, which also impacts onthe service provided to the client.

Medirest has introduced practices, such as the employee forumand weekly team briefs, which are designed to improvecommunication with the workforce. Communication, theybelieve, is vital to maintaining the trust and confidence of theworkforce. Involving the union with certain communication, suchas jointly branded letters and union attendance at the roadshows, can also help to build trust with the workforce andaddress issues that may otherwise affect performance.

Medirest, an arm of the food and support services company Compass Group UK and Ireland, delivers soft facilitiesmanagement (FM) services at Barnet hospital, part of Barnet and Chase Farm NHS Trust. The hospital was built under aPFI contract by Metier and the soft facilities management services was originally delivered by Ecovert, a subsidiary ofMetier. It is a 500 bed acute hospital.

In April 2007 the soft FM contract was awarded to Medirest. Approximately 300 staff were TUPE transferred over to thenew employer. Medirest delivers portering, catering, car park, security, cleaning and retail services to the hospital. Thecontract is due to run for 5 years until 2012.

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Case study 5

Parkwood Patient Transport Service in the West Midland

Background

The patient transport service for the north Staffordshire regionhad, until 2006, been delivered by the Staffordshire AmbulanceTrust. In 2006 the contract was awarded to ParkwoodHealthcare Ltd, part of Parkwood Holdings Plc, a companyproviding a range of support services to the public and privatesector including grounds management, leisure, and PFImanagement, as well as health services.

The procurement process was managed by the HealthcarePurchasing Consortium on behalf of the trusts. The unions didnot have any input at the procurement or tendering stage.

The transfer to the new service provider initially went smoothly.The TUPE transfer ensured that the terms and conditions of thetransferred staff were protected. However, within five months itbecame apparent that the employer was struggling to operatethe contract within budget, and was in fact operating at a loss.This led to a period of considerable cost cutting.

The company employed a number of new staff, taking the totalheadcount to approximately 100. These new staff wereemployed on Parkwood contracts with terms and conditions thatdiffered considerably from the transferred staff. The new staffhad a lower hourly rate of pay, less annual leave, less sick payand different working patterns. Transferred staff were entitled tocost of living increases and annual pay rises in line with the NHSAgenda For Change terms and conditions of employment.However, the company refused to pay the cost of living pay risesto staff so they were withheld.

The recognised union, UNISON, alleged that this amounted to atwo-tier workforce, in breach of the Workforce Code. At thesame time, the pressure to reduce costs was beginning to impacton the ability of the staff to do their job. Staff reported beingunable to order materials such as antiseptic wipes becausesuppliers had not been paid for previous orders. The companyalso began using unadjusted vehicles, such as taxis, withuntrained staff to transport patients which employees argueddamaged patient care.

However, efforts to resolve the situation with the employer wereunproductive. The union’s full time officer was at points barredfrom entering the sites, and the company attempted toderecognise the union, although they were unable to do solocally.

In November 2007 the union balloted its members for industrialaction in a bid to encourage the employer to abolish the two-tierworkforce, and following a positive result, began a period ofworking to rule in December. This came to an end on ChristmasEve when the Trusts, in response to the industrial action,triggered the Alternative Dispute Resolution Procedure (ADR).

A considerable delay followed, but in January 2009 theIndependent Person appointed to review the case found at stage1 of the ADR Procedure that the terms and conditions for new

starters did not comply with the Workforce Code, in that theywere not fair and reasonable, and left new starters overallworse off than transferred employees. Stage 2 of the Proceduredid not manage to produce a new set of terms and conditionsagreeable to all parties that would comply with the WorkforceCode. In June 2009 stage 3 of the Procedure compelledParkwood to implement a new set of terms and conditionsproposed by the Trusts, and back pay dating to the point atwhich the ADR Procedure began in January 2009.

The contract came to an end on 31st July 2009, and wassubsequently awarded to West Midlands Ambulance Service.Parkwood refused to pay the back pay stipulated in the ADRProcedure and so funds were eventually provided by theStrategic Health Authority.

After the contract was taken over by West Midlands AmbulanceService all staff, including the new starters employed onParkwood contracts, were moved onto current Agenda forChange terms and conditions. The employer holds regularmeetings and has good communications with the recognisedunions and the those parties interviewed for this study report thatstaff have gained access to new training opportunities, annualappraisals, and career progression. At the time of publication,the service was meeting its targets and performing well.

Analysis

Problems arose in this contract as the company struggled tooperate the service within budget. The company claimed thatthe contract was under priced and requested more money fromthe Trust during the life of the contract to meet the costs ofbringing new starters onto fair and reasonable terms andconditions. The financial problems also led to the cost cuttingthat directly affected staff, their terms and conditions, and theirability to do the job.

The company’s poor relations with the workforce and theirrepresentatives exacerbated an already difficult situation. Thebreakdown of communications led to industrial action as staffbegan to believe that there was little alternative.

Although staff claim they did their best to maintain patient care,they often felt the lack of resources hindered their efforts. Fewerresources also affected the management’s ability to reward andinvest in the workforce. Training and uniforms, for example,were limited as the company looked to save money. Pay for bothTUPE staff and those on Parkwood contracts were withheldleading to staff dissatisfaction.

All parties interviewed for this study suggested that correctlypricing contracts is crucial for success. The union has questionedthe procurement process for its failure to identify the short fall incosts. The contract has since been retendered for at a higherprice and different service specifications.

Parkwood Healthcare were awarded the contract to provide patient transport services to six, later four, NHS trusts in thenorth Staffordshire area from August 2006. The contract was initially for three years with an option to extend for a furthertwo years, and approximately 70 staff were TUPE transferred from Staffordshire Ambulance Service to the new employer.

The service transported non-emergency patients in the North Staffordshire region for treatment at the trusts. The contractwas worth approximately £6million and the service transported up to 500 patients per day.

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Case study 6

Robinia Learning Disability Support Services in Cornwall

Background

The outsourcing of learning disability support services inCornwall took place in the context of the integration ofhealth and social care for learning disability services. Upuntil that point, the local authority had provided day carewhile the NHS had provided residential care. Theoutsourcing was intended to break down that division, andalso deliver efficiencies through the introduction ofcompetition among providers. The trust had also received acritical report from the social care inspectorate, which furtherencouraged the trust and local authority to bring in newsuppliers.

Cornwall Council led on the commissioning. As staff wereTUPE transferred from the NHS to private and third sectorproviders, the Cornwall Partnership Trust, the NHS mentalhealth trust and previous provider, and Cornwall Councilsigned an innovative agreement to protect staff terms andconditions.

The contract contained a binding agreement on all newproviders to adhere to the terms of the Code of Practice onTwo Tier Workforce Arrangements, including providing a‘broadly equivalent’ pension.

The transfer took place on April 1st 2008. Five months later astaff enquiry revealed that staff pension contributions werenot being paid into staff NHS pensions. Contrary to theunderstanding of the workforce and union, Robinia did notgain direction employer status which would have entitledstaff within the organisation to remain in the NHS pensionscheme. Payslips continued to show deductions for “NHSPension”.

Until winning the contract, Robinia had no presence in thesouth-west, and staff reported a lack of managementsupport, concerns about practice and monitoring ofstandards. New staff that were brought in were employed onlesser terms and conditions which breached the agreementbetween the Cornwall Partnership Trust and CornwallCouncil. Robinia argued that they were unable to afford topay new staff at broadly equivalent rates to the TUPE staff.

The contract signed by Robinia obliged them to recognise aunion, but according to union officers, this did not translateinto a meaningful relationship. Unlike the other learningdisability providers, Robinia had no joint consultativecommittee or employee forum through which staff and theirrepresentatives could raise and address concerns.

Allegations of abuse also arose at two of the Robiniahomes, reported by external agencies. Staff were suspendedand replaced with agency staff. According to the UNISON

full time officer, several of these agency staff wereinexperienced and unsupported. A further serious incidentoccurred.

At this point, the local authority intervened and replacedRobinia with another provider who was already operating inthe area at one house, and gave them notice of terminationof their contracts for the other two. It became apparent atthis point that staff had never been placed in a pensionscheme and that their contributions had been accumulatingin a bank account.

The NHS Pensions Agency initially refused to readmit staffinto the scheme, but after the campaigns by the workforceand union, they were allowed to rejoin. The contracts for thethree homes were re-tendered and other providers broughtin. The union made efforts to remove the two-tier workforcewhich had emerged under Robinia, and succeeded inbroadly harmonising pay, although differentials continued toexist, particularly on annual increments.

Analysis

The outsourcing process initially placed great emphasis onensuring staff continued to be treated well and had termsand conditions maintained through the transfer. Anagreement to prevent the emergence of a two-tier workforcewas written into the contract with private and third sectorcontractors. However, there appeared to be no mechanismto enforce the agreement, and before long, new staff werebeing employed on lower pay and diminished conditions,and pension obligations were not being met.

The UNISON full time officer attempted to agree a protocolwith the Council commissioners on trade union involvementin procurement and tendering in order to try and ensure thatworkforce matters were fully considered at that stage.However, commissioners felt unable to involve the union dueto lack of capacity. This lack of involvement continued oncethe contracts were in place, as Robinia missed opportunitiesto work with the union to find solutions.

Finally, those interviewed for this study raised concerns aboutRobinia’s ability to manage the contract they took on withinthe budget agreed. Robinia’s lack of presence in the regionmeant that staff felt they did not have adequate support frommanagers. This was exacerbated by the geographicaldispersion of the three homes taken on by the company,which stretched management resources further. The standardof care provided at the homes came under considerablecriticism, and a serious incident occurred injuring one of theresidents.

Learning disability support services previously provided by the NHS were contracted out by the local authority departmentof adult social care and the Primary Care Trust to three, third and private sector providers in 2008.

300 staff were transferred to 5 providers. 30 staff were transferred to Robinia, a company principally based in theMidlands and south-east. Robinia took over three supported group living homes, providing accommodation and servicesto small groups of adults with learning disabilities and other health needs.

Ensuring High Quality Public Services

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