Lloyds Banking Group and Schroders plc will establish a new financial planning joint venture company for affluent customers. Under the deal, Lloyds will own 50.1 per cent of the share capital of the new joint venture and Schroders the remaining 49.9 per cent.
According to the joint press release: “The joint venture will address the growing gap in the advice market through a personalised, advice-led proposition, backed by world-class investment expertise and best in class technology. Lloyds will transfer approximately £13 billion of assets and associated advisers from its existing Wealth Management business to the Joint Venture. There will also be a referral agreement in place to enable Lloyds’ customers to benefit from this enhanced proposition”.
The Transfer of Undertakings (Protection of Employment) Regulations 2006, known colloquially as TUPE, are an important part of UK law which protect employees whose business, or part of the business they work in, is being transferred to another company. The regulations’ main aim is to ensure that, in connection with the transfer, employment is protected.
However, one of the many drawbacks of the legislation is that when it comes to terms and conditions of employment it only protects those elements that are contractual. Although, what the Bank considers to be non-contractual may be different to what we consider to be non-contractual.
There are a number of key issues that Wealth Management Advisers and those transferring to the new business will need to think about and consider:
- Contractual Terms will automatically transfer intact to the new joint venture and cannot lawfully be varied for any “reasons connected with the transfer”. However, once some time has elapsed, the new joint venture could try to make contractual changes – something we have encountered with other companies to whom the Bank has previously forced staff to transfer.
- Non-Contractual Terms – these include Pensions, Bonuses, Flex Scheme, etc – are not, however, protected by TUPE and the new joint venture does not have to replicate the Bank’s arrangements. Staff face huge losses unless these benefits are protected.
- The Pension Schemes likely to be offered by the new joint venture will be inferior to those provided by the Bank and, as a consequence, will leave staff substantially worse off.
- Over the last 24 months we have seen that the compensation payments being offered to staff for loss of pensions and non-contractual benefits have been significantly less than offered to staff during previous TUPE transfers. Furthermore, what was being offered will in most cases barely cover the losses staff face over the first 12 months after they transfer. The Senior Management team of the new joint venture need to understand that Wealth Management Advisers, who are highly qualified and will be highly sought after, will be looking for substantial compensation. Time and time again, Accord and Unite have simply rolled over and accepted the first offer on the table. That’s not going to be acceptable for Wealth Management Advisers.
- We’ve seen with some previous deals that the Bank’s severance terms have only being protected for two years, after which time the new employer may attempt to make staff redundant using the Statutory Redundancy terms. That’s not going to be acceptable to the union, or our members. The Lloyds TSB enhanced severance terms are contractual and should be treated as such in the transfer agreement.
We will keep members informed of any developments but in the meantime members with any questions on this Newsletter can contact the Union’s Bedford Office on 01234 262868 or they can email us at email@example.com.