CONFIDENTIAL
OWML Board Paper 06-08 – 18 June 14
Staffing Arrangements
This paper provides a summary of the Shepherd &
Wedderburn note to Open Water Market Ltd on
employment law implications of staffing arrangements
including secondments, consultancy and TUPE.
Background
1. The Open Water programme has so far utilised secondees from other companies
(including WICS, Ofwat, WaSCs and WOCs) or contractors.
2. With the incorporation of Open Water Market Limited (OWM Ltd) there is a
requirement to formalise these staffing arrangements and put in place a series of
policies and procedures to provide a framework for the legal entity.
3. In response to an action raised at the 8 May 2014 OWM Ltd board Shepherd &
Wedderburn have put together a note on employment law implications of staffing
arrangements.
4. This paper includes the full note as an appendix and summarises the advice.
5. Staff currently seconded to OWM Ltd are listed with details of their home employer
and together with an initial assessment against the three TUPE tests.
Key Points Summarised
6. The full note to Open Water Market Ltd on employment law implications of staffing
arrangements including secondments, consultancy and TUPE is shown in appendix
A.
7. There is a theoretical risk, but in S&W’s view a small one, that some of the existing
informal secondments (in particular, those from Ofwat) have triggered TUPE
transfers because the work now being performed for OWM Ltd was previously
performed for/by the existing employer. There is nothing that can be done now to
mitigate this risk further. In any event, it will only become a live issue if the relevant
worker chooses to assert a transfer has occurred because, for example, his/her
employment by the existing employer is terminated.
8. OWM Ltd should go ahead and formalise all the existing secondment arrangements
using the agreement S&W have prepared, not least because this will provide clear
evidence of the parties’ intentions and make it more difficult for the worker to assert a
transfer of employment has occurred. A draft form of secondment agreement has
been agreed between OWM Ltd and Ofwat, it is now with Scottish Water for review
and comment from an industry perspective.
9. Where the existing informal arrangement makes provision for what happens when
the secondment terminates, this should be reflected in the formal secondment
agreement. Where it does not, OWM Ltd has a choice to seek to include specific
provisions with the agreement of the employer (e.g. worker goes back to the
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CONFIDENTIAL
OWML Board Paper 06-08 – 18 June 14
employer who will have sole responsibility for ensuring the worker’s rights are
protected if the employment is terminated) or to include none. OWM Ltd will be
seeking to agree a formal provision along these lines with the relevant employers for
all secondees.
10. The inclusion of no formal termination provisions may be preferred where OWM Ltd
wishes to retain flexibility to offer employment to the worker (rather than lose him/her
back to the employer) or where the existing employer is unwilling to agree specific
provisions. However, formal termination provisions are preferred as it provides better
protection against the risk that the worker seeks to argue that his/her employment
has transferred to OWML
11. In relation to the existing informal secondments, there is no advantage in using
consultancy contracts rather than formal secondment agreements and there could be
disadvantages (especially the tax risks). Consultancy contracts may nonetheless be
preferred in respect of new workers where the tax risks can be successfully
mitigated.
Past TUPE Risk
12. There is a risk that the Transfer of Undertakings (Protection of Employment)
Regulations 2006 (“TUPE”) applied at the start of OWM Ltd taking over the work and
engaging the individuals on the informal secondment arrangements. Section 1 of the
S&W note sets this out, and paragraph 1.2 of that note explains the three tests where
TUPE could have applied at the outset of the informal engagement.
13. The following table lists those seconded to the Open Water Programme1 and
assesses which, if any, of the TUPE tests could be applied.
Secondee
Employer
Time Basis
Andrew Griffiths
Paul Fry
Dylan Freeman
Janine White
Louise Speedy
Tim Wagstaff
Vanessa Mallinson
Roisin Wilson
Stephen Beddoes
Jessie McLeman
Anglian Water
Anglian Water
Southern Water
United Utilities
Business Stream
Northumbrian Water
Severn Trent
Ofwat
Ofwat
Scottish Water
Part time
Full time
Full time
Full time
Part time
Full time
Full time
Full time
Full time
Part time
S&W Paragraph
Reference
1.2.1 1.2.2 1.2.3
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Yes
Yes No
Yes
Yes No
No
No
No
Paragraph references
1.2.1 the individual’s employer was originally carrying out the work
1.2.2 the work transferred to OWM Ltd and the employer ceased carrying out the work
1.2.3 but for TUPE applying, the individual’s employment would have been terminated
1
Ofwat provide a number of facilities and administration support activities to OWM Ltd. OWM Ltd do not
regard any of the Ofwat personnel engaged in these activities as being secondees or contractors to OWM Ltd.
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CONFIDENTIAL
OWML Board Paper 06-08 – 18 June 14
APPENDIX A
S&W note to Open Water Market Ltd on employment law
implications of staffing arrangements including
secondments, consultancy and TUPE
Attached as a separate document.
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