Slides in relation to the Eversheds Fair Deal webinar which took place on 18 October 2013.

1. Fair Deal Webinar
Gary Delderfield and Jane Marshall
18 October 2013

2. Fair Deal Agenda
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What is it
How has it changed
How does it apply to new contracts
How does it apply to retenders
Practical issues
Questions

3. Fair Deal
- What is it?

4. Fair Deal:
What is it?
• 1999 – HM Treasury non-statutory guidance
• 2000 – Annexed to Cabinet Office Statement of
Practice on staff transfers
• 2004 – HM Treasury further guidance
• 2007 – Best Value Direction for local authorities
• 2010 – Lord Hutton Interim Report
• 2011 – HM Treasury Consultation
• 2012 – Response and draft guidance
• October 2013 – Final new guidance

5. Linked to changes to public service
schemes
• Retention of Fair Deal protection part of the
‘deal’
• Separate Heads of Agreement for each scheme:
– New CARE benefit structure
– New governance arrangements
– Access for private contractors
• LGPS – 2014
• Teachers, Civil Service, NHS etc – 2015
• Scheme specific changes – separate process

6. New Fair Deal
- How has it changed?

7. New Fair Deal:
When does it come into effect?
• Immediate effect!
• Reflected in procurement practice as soon as
practicable
• Changes to public service schemes to be made
asap
• Long-stop date April 2015

8. New Fair Deal:
Which bodies does it apply to?
• Central government departments and agencies
• NHS
• Extended to:
– maintained schools (except where local
authority specific guidance applies)
– academies; and
– other parts of public sector under control of
Government ministers

9. New Fair Deal:
Application to local government?
• Still covered by Best Value Authorities Staff
Transfers (Pensions) Direction 2007
• Employees in maintained schools where
employed by local authority
• Possible DCLG consultation on amendments to
the Direction?
• Relevant where commissioning former NHS
services
• Fair Deal does apply to other bodies in LGPS –
e.g. academies

10. New Fair Deal
- New contracts

11. First generation contracts:
Old Fair Deal – A Quick Reminder

12. PUBLIC BODY
Service
Contract
Public
Service
Pension
Scheme
TUPE
CONTRACTOR
Bulk
Transfer
GAD
Certified
Scheme
OR
Public
Service
Pension
Scheme
£££

13. First generation contracts:
New Fair Deal

14. PUBLIC BODY
Service
Contract
TUPE
CONTRACTOR
Public
Service
Pension
Scheme

15. First generation contracts:
New Fair Deal
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Delivered by continued access on new contracts
Significant change to old Fair Deal!
No choice for bidder
No bulk transfer
Employee eligible to be a member of public
service scheme - enrol back into scheme on day
new employment commences
– Cost implications!
• Protection to cease if stop working on contract
• Ability to voluntarily agree changes to T&Cs?

16. First generation contracts:
New Fair Deal
• Delivered by continued access on new contracts
• Significant change to old Fair Deal!
• No choice for bidder
• No bulk transfer

17. First generation contracts:
New Fair Deal
• Non-active members
– enrol back into scheme on day new
employment commences
• Cost implications
• Protection to cease if stop working on contract
• Ability to voluntarily agree changes to T&Cs?

18. Participation in the public service
pension schemes
• Terms still to be decided by each scheme
• Amendments required in some cases
• Known unknowns:
– ‘Participation Agreement’ required
– Differential rate of employer contributions?
– Exit payment?
– Indemnities, bonds or guarantees?
– Administration costs?

19. First generation contracts:
New Fair Deal
• Pros:
– Simpler
– Cost savings (direct
and indirect)
– No bulk transfers
– Employee/union
friendly
• Cons:
– Lack of control
– Terms of
participation?
– Unknown costs?

20. New Fair Deal
- Retenders

21. Re-tenders:
Old Fair Deal – A Quick Reminder

22. 2013
2003
PUBLIC BODY
Service
Contract
TUPE
CONTRACTOR 1
Public
Service
Pension
Scheme
PUBLIC BODY
New
Service
Contract
Bulk
Transfer
1
GAD
Scheme
GAD
Scheme
2
Bulk Transfer 2
TUPE 2
CONTRACTOR 2

23. Retenders:
New Fair Deal

24. 2013
2003
Public
Service
Pension
Scheme
PUBLIC BODY
Service
Contract 1
TUPE
Bulk
Transfer
1
PUBLIC BODY
Bulk
Transfer
2
New
Service
Contract 2
£££?
CONTRACTOR 1
GAD
Scheme
TUPE 2
CONTRACTOR 2

25. Retenders:
New Fair Deal
• Default - Access back to appropriate public
service pension scheme (Change from 2012 draft
guidance)
• Option for bulk transfer from current BCS on day
for day (or equivalent)credit basis

26. Retenders:
New Fair Deal
• Details provided to bidders:
– Letter A (BCS onward bulk transfer terms)
– Letter B (Terms required by public service
scheme)
• Bidders indicate agreement or price
adjustment!!
• Shortfall underwritten by authority

27. Retenders:
New Fair Deal
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Works in an ideal world:
– Knowledge and understanding of new regime
– Enforceable onward bulk transfer terms
– Early engagement with public service scheme
– Timely provision of information to bidders
Will it work in practice?
Extra work and cost for bidders
Financial risk if get it wrong
Cost to public body of underwriting shortfall

28. New Fair Deal
- Practical issues

29. Practical issues:
- Which bodies are not covered by Fair
Deal?
• Local and other best value authorities
• Further and higher education
• Social housing
• Other parts of public sector – open to adopt Fair
Deal principles

30. Practical issues
- Existing procurements?
• New Fair deal has immediate effect
• Existing procurement not to be terminated or
delayed to accommodate new Fair Deal
• If at advanced stage – contracting authority to
consider if legitimate or desirable to apply new
Fair Deal
• Careful consideration of procurement law!

31. Practical issues
- Future of broadly comparable schemes
• New contracts - May be exceptional
circumstances when apply old Fair Deal
• Re-tender - Treat bidders equally - Incumbent
to have option?
• Comparable to current public service scheme
• Where not possible – comparable to old scheme
• Exceptional circumstances – require incumbent
and bidders to offer BCS
• Only if not otherwise possible to comply with
procurement law

32. Practical issues
- Returning employees to public
service schemes
• Circumstances other than retender?
• Examples:
– Insolvent employer
– Change of ownership
– Sub-contracting to new employer
• Case by case basis

33. Questions
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34. Fair Deal Webinar
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Fair Deal Briefing Note
Webinar recording on website
Eversheds Speedbriefs
Reform Tracker Page

35. For further information please
contact:
Gary Delderfield
: 0845 497 1786
: 0782 691 8202
@:
garydelderfield@eversheds.com
Jane Marshall
: 0845 497 1219
: 07919 173 281
@:
janemarshall@eversheds.com