Outsourcing and joint ventures

The material in this topic covers the employment law issues that may arise in relation to an outsourcing arrangement and in a joint venture (JV).

Outsourcing is the delegation of a business activity by an organisation (the client) to an external entity (the supplier or service-provider) specialising in that activity.

A business may choose to outsource for a variety of reasons, such as to:

  1. reduce costs

  2. improve performance

  3. improve the quality of service

  4. access skills or technology

Our materials use the term 'outsourcing' broadly, to cover three types of situation:

  1. where a service previously undertaken by a client in-house (eg payroll/cleaning) is outsourced

  2. where an outsourced service is assigned to a new contractor on subsequent re-tendering (sometimes known as 're-letting' or 'second-generation' outsourcing), and

  3. where a contract ends and the service is brought in-house by the client (sometimes known as 'insourcing')

Financial considerations are often the main business driver behind a decision to outsource but employment-related aspects can be crucial to the success of an outsourcing project.

Practice Note: How to deal with corporate support in employment

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Right to work guidance updated on Digital Verification Service checks

The Home Office has issued an updated version of its ‘Employer’s guide to right to work checks’ document, with the changes primarily related to simplifying the information on digital checks for employers of British and Irish citizens who have a valid passport (or Irish passport card). The new version has removed various technical details which were previously intended for providers of these digital verification services, and revised the relevant terminology, so that ‘Digital Verification Service (DVS)’ now includes both the terms Identity Service Providers (IDSPs) and Identity Document Validation Technology (IDVT). This is stated to align the guidance with the terminology used in the UK digital identity and attributes framework and the Data (Use and Access) Act 2025. Guidance and requirements specifically for DVS are now set out in a separate, supplementary code for digital right to work checks. The relevant guidance for employers has been revised. Although it is not currently mandatory for employers to use a DVS certified against the ‘trust framework’ and the supplementary code, this position will change ‘in the near future’, and it will become mandatory to use a DVS listed on the register of certified DVS (maintained by the Office for Digital Identities and Attributes (OfDIA)). In other changes, the new version reiterates that an original expired BRP is not proof of a right to work, and instead an online check must be taken. It also confirms that short-term entry clearance vignettes are being phased out, and that increasingly persons recently issued entry clearance will only have their eVisa to rely on for these purposes, so will need to create a UKVI account as soon as possible and can do this from overseas. In relation to asylum seekers with a pending claim, the guidance now states that they can also volunteer whilst their claim is considered without being granted permission to work, but they can only carry out 'paid' work if they have been granted permission to work under the Immigration Rules, Part 11, paras 360 or 360C. Previously the reference in our quotation marks to ‘paid’ work stated ‘voluntary’ work

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