The ‘Transfer of Engagement’ process will usually involve some change to the employment relationship and terms & conditions of employment. Therefore it has the potential to give rise to issues that may make the ‘transfer process’ more complex or contractual problems that may end up in an Employment Tribunal.
However, the transfer process also provides the opportunity to update and develop organisational, employment and contractual arrangements in line with new CU legislation and Central Bank regulations.
The HR challenges & opportunities created by a ‘transfer’ revolve around a number of key issues:
- Governance and management issues
- Harmonising pay and benefits
- Reviewing and updating employment policy
- Changing contracts and terms of employment
- Keeping valuable staff members on board
Governance and management issues
The Report of the Commission on Credit Unions 2012 identified the issue of governance as at the core of strengthening the regulatory framework for Credit unions. The 1997 Act as amended by the 2012 Act, sets out comprehensive governance requirements that are designed to provide a framework for improved governance standards, with a particular focus on the Board of Directors(governance and oversight functions) and the management team (implementation of policy and the operational functions).
The new standards emphasise the importance of the separation of authority and responsibility between the Board of Directors and the management team.
The Due Diligence investigation should seek to understand the current structure and consider future governance and management issues for the new entity.
Harmonising pay & benefits
Balancing the cost of your payroll against providing a reward package that will retain key employees and stimulate performance can be a very demanding task.
The TUPE legislation protects the terms and conditions of staff involved in the transfer, ensuring that staff carry all of their existing terms and conditions to the new legal employer.
The challenge is to review the range of options available and select the right mix – pay rates, performance bonus, sick pay, health care, travel allowances and pension.
Reviewing & updating employment policies
Bringing all employees under single legal employer and ensuring fairness and consistency across a range of policy areas – remuneration policy, working time, sick pay, leave entitlements, retirement age – can be a complex project.
Employment policy statements establish basic ground rules for employees and help protect the credit union from future litigation.
Changing contracts and terms of employment
The contract of employment is a legal agreement between the employer and the individual employee and any variation of an existing agreement needs the employee’s consent.
It is usual to consider incentives for the employee to agree to proposed changes – buyout of the term of the contract or offer an enhancement of the terms of employment, such as, increased holiday entitlement.
The employer will be expected to engage with the employee, take reasonable measures to reduce the negative impact on the employee and consider future employment options.
Keeping key staff on board
Staff members are only able to perform at their best if they understand their roles and rights and have opportunities to make their views known to management on issues that affect them.
Collaborative problem-solving is a critical tool to get the input of employees – it is employees who have the knowledge and experience of the detailed operations, the problems and the pitfalls, and how to improve member services.
Staff members should be given a timeline for the completion of the merger process and weekly meetings should be held to provide a forum for discussion and updates on progress.
It is not enough to have regular meetings and provide loads of information. In dealing with difficult issues it is important to give employees an opportunity to understand the issues and express their views. The time spent in collaborative problem solving will improve the decision making process and gain understanding and commitment to the implementation of the new arrangements.
16th June 2016