Key pension issues in a public sector outsourcing
Produced in partnership with Michael Hayles and Amy Davies of Burges Salmon LLP
Key pension issues in a public sector outsourcing

The following Pensions guidance note Produced in partnership with Michael Hayles and Amy Davies of Burges Salmon LLP provides comprehensive and up to date legal information covering:

  • Key pension issues in a public sector outsourcing
  • TUPE, Beckmann and Martin
  • What minimum pension benefits must be provided following the transfer?
  • Other pensions considerations on a TUPE transfer
  • Fair Deal
  • Public sector bodies not covered by Fair Deal 2013—best value authorities
  • When does the Best Value Direction apply?
  • Prospective revocation of the Best Value Direction
  • Principles of Good Employment Practice for new hires

Outsourcing occurs when an organisation enters into an agreement with a third party, by which that third party assumes responsibility for providing services which are currently provided by the organisation.

The staff delivering that service on behalf of the organisation may transfer employment to the third party under the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE). Under TUPE, transferring employees have the right to retain the same terms and conditions of employment as provided by their previous employer, with the exception of most rights under an occupational pension scheme (as defined by the Pension Schemes Act 1993).

The benefits provided by public sector pension schemes are generous compared to those typically provided by private sector employers, and so form an important part of the overall reward package for public sector employees. Protecting the pension benefits for those public sector employees whose employment is transferred on an outsourcing of services is therefore an important public policy consideration, and various mechanisms have developed to ensure that these rights survive the operation of TUPE.

Public bodies and third parties contracting with them should therefore be aware of the various pension issues that may arise during the course of an outsourcing arrangement from the outset of any tendering process.

This Practice Note focuses on the key pension issues which arise when employees