The Hidden Hand

Thanks go to the reader for sending in this interesting piece:- 

Kent Surrey and Sussex branch news. Don't let your CRC employer off the hook when they blame the owners!

Dear Members

There has been so much confusion around the staff transfer that has led to members not really understanding who their employer is and how it all works. I have therefore put together this briefing for our members in the hope it may clear the fog and help to understand who our employer is and how we got to be here.

The CRC is a limited company (companies Act) and their records can be obtained from the Companies House website, including details of the registered officers and executive Directors.

Company Law requires company directors to prepare reports, keep adequate accounts of transactions to disclose at any time the company and group financial position, in accordance with Companies Act 2006. Other duties to be exercised under the Act are to promote the success of the company, retain independent judgement, take reasonable care, skill and diligence, and avoid conflicts of interest. Safeguard the company and group assets, including taking reasonable steps to prevent and detect fraud and other irregularities.

Following creation of the CRC and staff split, 'a transfer of undertakings' resulted in the Trust staff and business functions being transferred to the CRC (TUPE regulations applied). The secretary of state determined that share sale, seven months later, did not constitute a secondary 'transfer of undertakings' to the parent company as share sale situations are not generally bound by the provisions of TUPE regulations.

Staff were therefore transferred under the government statement of practice (COSOP) but provided for 'no less favourable treatment' than TUPE although arguably through previous tests it is a less binding arrangement than an Act. Nonetheless, negotiations and agreements were made on specific time bound and permanent measures under the OM Act 2007 to protect terms and conditions of employment, including a binding agreement to retain the functions of the national negotiating body (NNC).

Interestingly, case law presents that a 'transfer of undertaking' has previously been determined by a tribunal court to have taken place in spite of the share sale scenario not generally covered by TUPE regs. Where a parent company mixes funds with the subsidiary, shares insurance contracts and employee benefit plans, markets both companies as a single entity, files consolidated income tax returns for example, it may be an indication of an inappropriate level of control exerted over the subsidiary by the parent company which significantly reduces its independence. Notably, there are publications that state the relationship between parent and subsidiary should not be a parent/child relationship or present as a single entity as this may arguably cause liability issues. Notwithstanding, it gives rise to potential claims for compensation on the grounds that the parent company is the employer but there was a failure to consult over the secondary transfer.

At any rate, KSS CRC remains a subsidiary of Seetec Group, the parent company, but the CRC untested remains the legal employer. The contract for the package area to deliver probation services is held between the CRC and the authority (SoS) and not with the parent company albeit they provide for certain warranties under the contract.

Whilst the employers identity may be confusing and relevance not immediately apparent, the union recognition agreement was transferred to the CRC in much the same way the employment contract was transferred. This means your local union reps, unlike Napo HQ, are ensuring we consult and negotiate with your employer to maintain employer relations. That is not to say we are not in discussions with Seetec but our employer must be accountable and ensure the parent company is not inadvertently or knowingly advancing their interests to the detriment of the CRC, its employees, our members.

Although the Secretary of State may indemnify the parent company against liabilities arising from CRC employee claims, in turn the CRC indemnifies the SoS against liabilities arising out of performance issues against contract obligations, including breaches of statutory duties. Liabilities here include any award, compensation, damages, loss, order, penalty or settlement payments, costs and expenses reasonably incurred in connection with a claim or investigation. The parent company underwrites these liabilities but this should not be an enabler for the parent company to stand between the employer and employee on negotiations neither an enabler for the CRC to delegate or deny responsibilities to their employees. In any event claims against an employer must be brought to their direct attention so it stands to reason we and our union leaders should be engaging with the CRC.

Yours,