W: www.universitybusiness.co.uk | T: @UB_UK


The legal structure can then fi t around


the institution's chosen objectives. The model does not need to be complicated or costly to establish but experience shows that early strategic planning is essential to ensure that the process goes to plan. Two of the biggest perceived barriers from a legal perspective in any model are public procurement and employment/ pensions issues. Models range from very informal


through to outsourcing or corporate joint venture structures, and everything in-between. Administrative models (such as informal joint working agreements, service level agreements and/or ad hoc secondment of staff ) are often short term, run on a cost-recovery basis and do not involve signifi cant infrastructure or other investment. These arrangements do not always require a public procurement process and, under the forthcoming new procurement directives due later this year, there will be further fl exibility for so-called 'horizontal' collaboration models to be put in place without being fi rst required to tender. The employment issues are also


relatively straightforward to manage as, in the majority of cases, employees will remain with their original employing institutions. It is, however, important to ensure that there is clarity with employees in relation to any expectations of them during any period of collaborative working and to review whether any changes to employee terms and conditions are needed to facilitate the collaborative working. Contractual models generally involve the award of a services contract either to another university, public organisation or to a private/public outsourcing provider. This could be on behalf of one or more universities. Public procurement is always relevant when a services contract is ho


awarded by a 'contracting authority', which includes the vast majority of he U


universities in the UK. Planning the procurement process early is key, particularly in testing the choice of procurement route and evaluation criteria for the award. Again, more fl exibility will be introduced later this year under the new procurement directives which will introduce a new 'innovation partnership' procurement route. This could be at ractive


concern for employees and may require the legacy employing institution to build in contractual commitments to preserve pension provision in the transfer agreement. The institution or third- party provider receiving the employees will seek assurances that they inherit employees without any outstanding claims or, where claims exist, there is an appropriate indemnity in place. Similarly, early consideration needs to be given to the exit provisions on termination as to whether the employees will transfer again, or whether there will be a liability for redundancy payments if a project has been completed. Corporate models typically involve


“Models range from very informal through to outsourcing or corporate joint venture structures, and everything in-between”


to institutions looking to push the boundaries on a shared services contract. An important employment


consideration is whether the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply to transfer employees. TUPE will generally be triggered where the activities performed by the employees transfer to another institution (or a third-party provider) who will be taking the lead in performing the shared services. Employees will transfer on their existing terms and conditions, but there may be limited protection for pension contributions which can be a real


BELOW: Gareth Edwards (left) and David Hansom (right)


the creation of a new corporate entity (possibly as a joint venture with other universities or the private sector) to run services, often with a view to a wider trading function. Historically, a major barrier to sharing services was unrecoverable VAT on service charges. Thanks to changes in the Finance Act 2012, independent entities (including universities) can form a cost sharing group (CSG), which can provide services to members of the CSG to recover each member's share of the cost without charging VAT. Again, creative application of the public procurement regime may mean that it is possible to structure such arrangements outside of the rules. In any procurement process,


institutions may well want to take socio-economic criteria into


consideration in awarding contracts, such as the extent to which the contract can benefi t the local area, students, staff and the community. Considering these issues for procured services contracts is now a legal duty on universities under the Public Services (Social Value) Act 2012 and further measures to encourage socio-economic procurement will be unveiled in the new directives. Sharing services is not just about saving cost, and the real challenge is to collaborate whilst retaining each institution's competitive edge in at racting students and investment. Whilst not always an easy balance, the shared services path is increasingly well trodden and off ers real tangible benefi ts to


institutions to compete in a global economy. UB


Gareth Edwards and David Hansom are partners at national law fi rm Veale Wasbrough Vizards (www.vwv.co.uk), which is number one ranked for its work in the education sector. For further information or advice on any issue you may be facing, please contact either Gareth or David via gedwards@vwv.co.uk or dhansom@vwv.co.uk.


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