The Bank has announced what amounts to a

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1 24 Hour Advice Line: Fax: General Secretary: Mark Brown 13TH MARCH 2012 ALL MEMBERS IN GROUP PROPERTY Group Property Announces Major Reorganisation Including Compulsory TUPE Transfer Of 290 Staff The Bank has announced what amounts to a wholesale dismantling of its Group Property function, involving the compulsory TUPE Transfer of 273 Staff to MITIE, a further 17 Staff to CBRE and significant reductions in staff numbers in those activities it intends to retain. This constitutes part of a wider announcement by the Bank today involving the loss of 1,821 jobs: including further TUPE Transfers, Offshoring of jobs to India and the slashing in half of the Bank s Training function. Key Features of The Reorganisation There are several key parts to this programme of reorganisation and job reductions announced by Group Property: Compulsory TUPE Transfer of 273 Facilities Management & Supply Chain Staff to MITIE: The roles of 273 Staff - including 18 from Channel Islands / Isle of Man and 19 from Commercial Finance - are to be transferred to MITIE on 1st August Whilst staff will have no option but to transfer, there may be significant redundancies following the transfer although we will not know for certain until full discussions with MITIE begin. Compulsory TUPE Transfer of 17 Asset Management Staff - and a small element Property Business Services - to CBRE. Design & Construction / Data Centres: The number of staff retained by the Bank in this area (currently 93 FTE) will be slashed by more than half, with 26 FTE jobs being INSIDE Legal Protection - TUPE Explained Staff Issues Explained Support From LTU TUPE transferred to MITIE and a further 28 FTE roles made redundant. Property Business Services: The number of staff in this area will be reduced from 59 to 41 FTE, with 2 staff being TUPE transferred to MITIE and a further 16 FTE roles scrapped altogether. Major Concerns For Staff These changes will have major consequences for Group Property Staff. 290 actual people (as opposed to FTE) will be forced to transfer to either MITIE or CBRE and many others (over 40) face the prospect of being made redundant. For those staff being forced to TUPE Transfer out of the Bank, LTU will be doing all we can to protect the full value of their Employment Package - that is both Contractual Terms and Non-Contractual Benefits - to ensure that staff will not be left considerably worse off as a consequence of the transfer. As we explain inside, to achieve this we will need the full involvement and support of Group Property Staff.

2 2 What Future For Facilities Management Staff? The Bank s rationale for TUPE Transferring the overwhelming majority of its Facilities Management Staff to other companies - MITIE and CBRE - and significantly reducing staff numbers in the functions it intends to retain in-house, is obviously to slash its operating costs. Inevitably, staff will shoulder much of this burden and therefore Facilities Management Staff will come under two key pressures: The prospect of large numbers of redundancies once staff transfer; especially those transferring to MITIE, although we will not know for certain until full discussions commence. MITIE will be expecting to provide more of an in-house end-to-end service itself for most facilities management activities and therefore there is unlikely to be anywhere near the same demand for the roles currently being carried out by Lloyds Staff. Inevitably, there will be a geographical dimension to this too, with some staff currently based in areas where there will be less demand for their types of roles. A squeeze on the Employment Packages of staff whom MITIE and CBRE intend to retain over the longer-term and especially the prospect of dismantling of Non-Contractual Benefits that are not protected by TUPE legislation. Whilst it is true that Contractual Terms (such as Basic Pay, Sick Pay, Severance Terms, etc) are protected over the shorter-term for a period of at least 12 months once staff have transferred, there is no requirement upon new employers to continue offering Non-Contractual Benefits such as Pensions and Bonuses. This is despite the fact that these account for a significant proportion of the overall LBG Employment Package. So, as we explain later, staff face the risk of significant financial losses once transferred to MITIE or CBRE. We should nevertheless stress that at this stage LTU has not had the opportunity to meet with MITIE and CBRE to discuss their respective future intentions - these meetings will commence shortly. Protecting Staff LTU will be doing all we can to ensure that staff are properly protected - in terms of their Job Security, Transfer Terms and Compensation for any loss of Non-Contractual Benefits - and we will be counting upon the full support of Facilities Management Staff to achieve this. Members can find out more about LTU s support for staff being TUPE Transferred and the key issues that can arise during TUPE Transfers, by following the experience of Group Operations Clearings Staff who were forced to transfer to IPSL last year. Details can be found on our website at Newsletters/19,2. It will also become abundantly clear to anyone reading about this and other previous TUPE Transfers that LTU is invariably the only trade union to provide transferring staff with the professional support and negotiations that they need if they want to be represented professionally. Legal Protection : TUPE The Transfer of Undertakings (Protection of Employment) Regulations, more commonly known as TUPE, were first introduced in and last updated in to help protect the rights of employees where there is a change in their employer. The main objectives of the law are to: Ensure that the recognised unions of staff to be transferred (i.e. LTU) are informed and consulted fully on the proposed transfer and its impact on staff. Ensure that the contracts of employment of staff are transferred automatically between employers and their terms and conditions protected.

3 The TUPE Regulations provide the following protection for employees transferred between employers: Existing contracts of employment transfer to the new employer. The period of employment with the Bank is treated as continuous service once staff transfer from the Lloyds Banking Group to MITIE/CBRE. Rights and benefits relating to the period of continuous employment remain; such as for redundancy, unfair dismissal, etc. Any employees who are dismissed for a reason connected with the transfer can claim unfair dismissal. If worse contractual terms and conditions are offered by MITIE/CBRE at the time of transfer then staff may resign and claim constructive dismissal. If MITIE/CBRE were to attempt to impose new terms and conditions by dismissing employees and re-employing them on new terms, the dismissal will automatically be unfair. It is particularly important that staff bear in mind that previously the Bank has argued that, in terms of remuneration, only Basic Salary is transferred to the new employer. It may seek to argue that staff are not entitled to an amount equal to Flavours, Bonuses or participation in the Sharesave Scheme. Pensions are also not legally protected. In other words, staff transferring from the Bank to MITIE or CBRE could, unless LTU successfully negotiates proper compensation and protection, suffer significant cuts in their overall income. Real Protection Needed It is also important to stress that the protection provided by the TUPE legislation typically only lasts 12 months. After a year, employers have successfully forced through changes in terms and conditions by arguing that these changes are unconnected with the transfer but for some other business reason. Furthermore, TUPE merely takes a snap shot of existing staff terms and conditions - preserving rather than protecting them. So, for example, those benefits that might ordinarily have been expected to accrue over time - such as Basic Salary, Holiday Entitlement, Sick Pay, etc - may no longer continue to do so! This is an important issue if the standard terms and conditions of the new employers are less good than those of the LBG Staff being forced to transfer onto them. It is therefore essential that LTU negotiates robust and effective protection for staff that we can be sure lasts well beyond the first twelve months following transfer. Added Complexity The negotiations on the transfer of Facilities Management Staff to both MITIE and CBRE are likely to be particularly complex not only because of uncertainty at the present time over MITIE s and CBRE s future intentions for staff, but also because of the myriad of different contractual arrangements staff currently have. Key arrangements such as Severance Terms and Pensions have not yet been harmonised across LTSB and HBOS heritage staff, whilst other staff have opted to remain on their existing LTSB Contracts of Employment. Negotiations To Begin The Bank and MITIE/CBRE have a legal obligation to negotiate with LTU on the Transfer Terms with a view to reaching an agreement. At this point, LTU has been given no details of MITIE and CBRE s respective intentions, with initial consultation and negotiations on the Transfer Terms only due to commence over the coming weeks. However, as experience of the last major TUPE Transfer by the Bank - that of Clearings Staff to IPSL last year - has once more shown, LTU is the only Union committed to negotiating and campaigning for a fair deal for staff being TUPE Transferred. Thus the amount of financial and contractual protection and compensation staff receive will be down entirely to LTU s negotiating expertise and the level of engagement and support that we receive from Group Property Staff. During the Clearings negotiations LTU was alone in forcing substantial improvements to the Transfer Terms and Arrangements. The Union, Bank and representatives of MITIE and CBRE will now be meeting on a regular basis over the coming months in order to discuss the transfer arrangements, protection for staff and appropriate compensation for the loss of non-contractual benefits once staff transfer. 3

4 4 Key Issues For Staff There are a number of key issues and concerns for all the Facilities Management Staff the Bank intends to transfer to the employment of MITIE/ CBRE, although how exactly these will affect staff depends both upon which Contracts they are currently employed and whether they were employed originally by Lloyds TSB or HBOS. Basic Salary Though the TUPE Regulations provide legal protection of Basic Salaries, this does not necessarily give staff long-term peace of mind. It will be important to consider how the Basic Salaries of Facilities Management Staff compare to those of other employees of MITIE/CBRE. After all, if the salaries of Facilities Management Staff are higher - as we suspect is the case - then there is a risk that, over a period of time, the transferred staff would receive lower pay rises than their new colleagues in order to bring into line (i.e. cut) their salaries. It will also be important to understand whether MITIE/CBRE intends to adopt the same vindictive approach as the Bank to the pay of those staff who have chosen to remain on their original LTSB Contracts. Equally, MITIE/CBRE might intend to downgrade many staff, just as IPSL intended when staff were transferred from LBG Clearings. However, detailed discussions with MITIE and CBRE have not yet commenced and until they do we will not have a clear idea of their future intentions. Until negotiations begin on the Transfer Terms - and full details are provided on MITIE/CBRE s Salary Scales and Pay Policy - it isn t possible to assess fully how much of a problem this might be. During those previous TUPE transfers that have proceeded smoothly, LTU has won guarantees protecting salaries over the longer term - by up to 6 years - and we will be seeking similar arrangements during these negotiations. Total Pay The Bank repeatedly attempts to persuade staff that it is their Total Pay - not Basic Pay - which is important; at least it does until it intends to compulsorily transfer staff to other employers! In the past the Bank has sought to argue that once staff are transferred to another employer, they are no longer entitled to amounts equivalent to Flavours, Bonuses or Sharesave. In other words, it is important that LTU secures guarantees that staff do not face the prospect of cuts in their spendable income on transfer. The benchmark has been set during several previous TUPE transfers, where LTU has won agreement on Transfer Terms which provided compensation equivalent to these lost benefits; in the form of salary supplements and/or Loyalty (or Transfer ) Bonuses. LTU will be seeking similar protection for the Total Pay of Facilities Management Staff, ensuring that they receive the full value of those non-contractual arrangements that MITIE/CBRE are unwilling or unable to replicate. Job Security Another key issue for staff is Job Security, particularly since staff will be transferring to organisations which we suspect will intend to introduce significant changes to roles and future staffing requirements. LTU has negotiated Severance Terms within the Bank that are far superior both to the basic legal entitlement and those of most other employers. Though the period of continuous employment in the Bank would read-across to the two new companies, it is important to ensure that, if staff were made redundant at some stage in the future, this would not be on inferior terms. During previous TUPE transfers, LTU has secured a guarantee that the current Severance Terms would continue to apply for a significant period following the transfer; providing staff with at least some peace of mind. LTU will be demanding guarantees that existing levels of Severance Terms are protected until at least Pensions One of the biggest shortcomings of the TUPE Regulations is their failure to properly protect Pension entitlements. This is an area to which LTU will be paying particular attention in order to ensure that Facilities

5 Management Staff do not lose out on key benefits. LTU will evaluate any Pension Scheme proposals offered by MITIE/CBRE carefully and will be pressing both new companies to match fully the value of these benefits. Different arrangements may need to be tailored to different groups of staff depending upon whether their pension benefits accrue under the Final Salary or Personal Investment Plan (PIP) arrangements. During TUPE transfers, typically staff are presented with the choice of leaving their existing pensions in the Bank Pension Schemes or transferring the value of their pensions to the new employer s scheme. Though staff in the Final Salary Scheme will almost certainly be best off leaving their Pensions in the existing Bank Schemes, the optimum course of action may differ between staff, depending upon their individual circumstances. For this reason, it is likely that LTU will be pressing the Bank to provide an independent financial adviser to advise staff individually. LTU has Trustees representing members interests on the Bank s Pension Schemes and will be able to take advice from it s Actuaries (specialist pension advisers) to ensure staff pension entitlements are fully protected. Other Contractual Terms Though discussions have not yet started on the Transfer Terms, there will undoubtedly be significant differences between the Bank s and MITIE/CBRE s standard Terms and Conditions of Employment. These may be in a host of different areas, in addition to those already touched on, such as: Working Hours and Patterns Holiday Entitlement Overtime Pay Car Provision Bonus and Incentive Arrangements Salary Payment Arrangements Maternity Benefits Sickness Benefit Shift Pay Arrangements Staff Benefits Package Only once our discussions on the Transfer Terms and MITIE/CBRE s existing arrangements begin in earnest, will LTU be able to assess how the two employment packages compare and ensure existing Facilities Management Staff terms and conditions are properly protected. Preservation Versus Protection It is important staff understand that, at best, the TUPE legislation merely preserves (or takes a snap shot of) - rather than protects - terms and conditions of employment. Where the Bank s arrangements accrue with service - such as Holiday Entitlement and Sick Pay - there is no guarantee that this accrual will continue. Staff may merely continue on their existing level of benefits indefinitely. In a similar vein, staff will be aware of how the Market Indicator approach operating within the Bank discriminates against staff whom the Bank believes are paid above the market rate. If, for example, Facilities Management Staff are paid higher salaries than comparable MITIE/CBRE staff, there is a very real danger that once Facilities Management Staff have transferred, many would be at risk of receiving no further pay increases for many years to come. During negotiations, LTU will be pressing for guarantees on future salary increases and on servicerelated benefits. Contracts Uncertainties Though the TUPE Regulations are supposed to give full protection of the terms and conditions of staff transferred between employers, the reality is that some employers have been able to undermine contractual rights once a period of time has elapsed following a transfer; typically over one year. This means that, despite reassurances that will no doubt be provided by the Bank and MITIE/CBRE, there is a danger that over the medium-term MITIE/ CBRE may eventually decide to harmonise - or level down - the arrangements for transferred Facilities Management Staff in accordance with the rest of its staff. It will therefore be essential that LTU negotiates arrangements to ensure long-term, guaranteed protection of the Transfer Terms. In the past, this has included full negotiating and representation rights for LTU on behalf of transferred staff specifically in respect of safeguarding and protecting the Transfer Terms. 5

6 6 Key Negotiating Principles During our negotiations on the Transfer Terms with the Bank and MITIE/CBRE, LTU will be guided by a number of key negotiating principles that are designed to ensure that Facilities Management Staff will be no worse off - financially or otherwise - as a consequence of being forced to transfer between companies. These key negotiating principles will be that: All contractual terms and conditions must be protected for a period of at least five years following the transfer. Of course, we would prefer indefinite protection, but the fact is that employment law only recognises protection that is provided over a set, reasonable period of time. Five years protection meets this criteria and would provide staff who are transferring with some confidence in their new employers intentions and certainty over their future circumstances. If MITIE or CBRE were to refuse to negotiate such guarantees, our obvious question would be why not? Would it mean that the new companies might consider compromising contractual arrangements - perhaps harmonising these with the company s other staff - some time after 12 months has elapsed! Of course, if MITIE/CBRE were to want to harmonise terms and conditions with its other staff, they would be free to commence negotiations with LTU to do this. But we would have the certainty of knowing when doing so that if the new arrangements being proposed were not satisfactory, existing terms and conditions would remain. The value of arrangements that cannot be replicated in full - such as Final Salary Pensions entitlement and maybe the Sharesave Scheme - must be at least matched. If MITIE/CBRE are genuinely committed to Facilities Management Staff being left no worse off following transfer, this should not be a problem. In the case of Pensions, this might require an actuarial valuation of existing arrangements. Compensation must be provided for the value of lost Benefits either in the form or an enhancement to Basic Salaries, the payment of a Transfer Bonus or a mixture of both. Where payment of a Transfer Bonus is preferred, this should be equivalent to the value of three years loss of benefit; grossed up for the loss of any tax benefit. MITIE/CBRE should guarantee to continue recognising and negotiating with LTU - as the trade union representing the majority of Facilities Management Staff - for a minimum period of five years following the transfer. This should be in relation to all collective matters concerning the Transfer Terms and Individual Representation. LTU believes that these are all reasonable principles by which all parties - the Union, Bank and MITIE/CBRE - can and should sign up to when entering negotiations on the Transfer Terms and arrangements. Any failure by either the Bank or MITIE/CBRE to commit to these will lead to serious doubts over the future prospects of staff transferring to MITIE/CBRE. Negotiations To Commence Though the Union has already been briefed under embargo about the Bank s intention to transfer Facilities Management Staff to MITIE/CBRE, it has not been possible to begin full negotiations until staff have been notified. These negotiations will now take place over the coming months. It is essential that LTU s considerable experience in representing staff being TUPE transferred is combined with the detailed knowledge of representatives of staff working for Facilities Management. We must also assemble a team of Representatives to attend these negotiating meetings and help shape the eventual Transfer Terms. In fact, we want to assemble two teams of representatives, providing a cross section of staff being transferred; one for those staff being transferred to MITIE, the other for those transferring to CBRE. This really is a priority. Anyone interested should contact me on or by at Steve.Tatlow@ltu.co.uk.

7 7 Experience From The Clearings- IPSL TUPE Transfer Last April, the Bank announced the TUPE Transfer of its Clearings Operation to another employer, IPSL. The TUPE Transfer was completed in November This TUPE Transfer provide a clear illustration and unique insight into some of the key issues that arise when staff are TUPE Transferred out of the Bank. It also shows just how important it is that staff can count upon the sort of professional trade union representation which, in the Lloyds Banking Group, only LTU provides. Importance Of Negotiations The most important lesson of the Clearings-IPSL Transfer was that without professional and effective trade union representation - supported by a fully engaged and committed membership - staff could lose out significantly when forced to transfer to another employer. Unite chose to accept. Unsurprisingly, by the end of negotiations we don t think Unite had any members left! In fact, the Transfer Terms that LTU eventually negotiated were better than some staff would have received if they had left on the Bank s Severance Terms rather than transfer to IPSL. LTU will be demanding that compensation for Facilities Management Staff at least matches this. Importance Of Membership Involvement & Support During the Clearings-IPSL Transfer, LTU had an overwhelming level of membership involvement and support that was critical to supporting our demands for drastically improved Transfer Terms and Arrangements. The table shows Pension Scheme Arrangements both what the (at 31st July 2011) Bank-IPSL s original final offer of Transfer Terms was (which Unite chose not to campaign against) and the substantial improvement eventually negotiated by LTU after Unite had given up. These Compensatory Payments were designed to account for the loss of all Non-Contractual Benefits and were linked to the Pension Scheme staff were on, since pensions accounted for the greatest loss of benefits to Clearings Staff. LTU s robust approach to negotiations and the Union s rigorous analysis of the Bank- IPSL proposals at the time, resulted in the compensation Clearings Staff would receive typically increasing by: five times the Bank s derisory offer made in June 2011, and; three times what the Bank-IPSL insisted was its Final Offer in July 2011, which Final Offer (July 2011) Eventual (Aug 2011) Defined Benefit: Non-Contributory 20% 61% Defined Benefit: Contributory 18% 50% Defined Contribution 12% 35% No Pension 8% 18% Staff made it abundantly clear that they would have been willing to vote for Industrial Action had the Bank-IPSL not substantially improve their offer. This will be just as important during our negotiations with the Bank and MITIE/CBRE on the TUPE Transfer of Facilities Management Staff. But unlike Clearings Staff who worked on one site, Facilities Management Staff are dispersed throughout the UK and so will be substantially harder to organise and communicate with effectively. That is why we will need all Facilities Management staff to confirm their contact details - especially addresses - with LTU and why we need a cross-section of FM members to become involved in supporting our negotiations on their behalf. Members should either contact our Advice Team on or 24Hours@ltu.co.uk.

8 Transfers Fraught With Dangers Unfortunately the Bank does not have a good track record for giving proper consideration to the future prospects of the staff it is forcing to transfer to other companies. A transfer of LTSB Registrars staff to another company left staff exposed and many staff had to resort to taking cases to Employment Tribunal, whilst the transfer of a group of C&G Mortgages Staff to another company ended up in disarray when the new company collapsed and staff were made redundant just months after being transferred out of the Bank. In these and many other cases, staff have received totally committed support from LTU. LTU Support For Facilities Management Staff LTU has a strong membership across LTSB s Facilities Management operation and a growing membership within HBOS sites too. providing members with the following professional support: Professional negotiations on behalf of staff by experienced LTU Officials who have considerable experience negotiating on behalf of staff during TUPE negotiations. Further support from LTU s Local Officials who will be conducting regular visits to provide our members with full advice and support. Regular in-depth Newsletters from LTU providing advice and guidance on the rights and entitlements of staff. A 24 Hour Advice Line Service ( ) that members can call to speak directly to an experienced LTU Official at any time; whether during the day, night or weekend. Members wanting further information on these or any other LTU services should telephone our Head Office on During the coming months, as the Bank prepares for the transfer of staff to MITIE and CBRE, LTU will be STEVE TATLOW Assistant General Secretary