Councils, IBM face legal action over outsourcing deal

Two local councils and IBM face action at the employment tribunal over claims that a £400m outsourcing joint venture broke rules on the transfer of public-sector staff.

The dispute revolves around the transfer of 1,500 local-government jobs in Somerset — including more than 130 IT workers, as well as finance, human-resources, property-procurement and contact staff — to a joint venture company, Southwest One, at the end of 2007.

Trade union Unison is taking the global services giant and its partners to an employment tribunal in October.

The union claims IBM, Somerset County Council and Taunton Deane Borough Council kept Unison in the dark over the deal and broke a Transfer of Undertakings agreement by refusing to reveal the full details of the terms under which staff would be transferred.

Somerset Council hopes the Southwest One deal will save £200m over 10 years, with some of those savings expected to come through not replacing some of the 70 percent of staff expected to leave the joint venture over the decade.

Avon and Somerset Police have also joined Southwest One, and up to 35 local bodies could opt to have the joint venture run some of their services.

Nigel Behan, branch secretary for Unison South West, said: "We were never properly consulted on the staffing agreement. Where is the democracy? A lot of council members did not see the details of this agreement."

He said that only parts of the staffing transfer agreement were revealed ahead of the joint-venture contract being signed in September last year.

Somerset Council did later offer to let Unison see the full details of the staffing transfer agreement, but only if Unison signed a confidentiality agreement. Unison officials refused as it would have prevented them from informing their members.

Unison also blamed IBM for placing too much importance on meeting targets within Southwest One that get in the way of the "core job".

The union has also raised concerns about disruption caused by the implementation of SAP ERP software at Southwest One, due to go live in February 2009. Southwest One has hit back at those criticisms, saying IBM has 150 consultants dedicated to implementing an uncomplicated, "vanilla" version of the software.

Richard Crouch, head of human resources at Somerset County Council, is handling enquiries about the employment tribunal and acknowledged the council had not been able to be as open as it would have liked.

He told ZDNet.co.uk sister site silicon.com: "When you are working with the private sector, it is very different from the public sector. Right from the beginning, we had to set up some sort of confidentiality protocol and we invited Unison to sign this but they refused."

"Because we could not be seen to share information given to us in confidence by the private sector, we have done the best that we could at the earliest possibility," said Crouch.

Crouch said there had been more than 20 meetings with Unison where details had been shared of staffing agreements and the Transfer of Undertakings agreement terms.

Crouch said council staff transferring to Southwest One are "guaranteed 10 years of employment" but added that many posts were likely to be unfilled after people departed. Staff are being transferred to the venture on their existing contract terms and conditions.

He said: "There would be posts lost because the savings that have to be made are large."

Crouch defended the emphasis on meeting targets as due diligence in protecting public spending.