Board meeting 28 February 2007

Transcription

1 This paper is being submitted to the Trust Board for amendment and/or approval as appropriate. It should not be regarded, or published, as Trust policy until formally agreed at the Board meeting, which the press and public are entitled to attend. Board meeting 28 February 2007 Title: Governance Report - Provision of Payroll Services from April 2007 Presented by: Sue Basham, Director of Corporate Services & Human Resources Number: NPCT/07/22 Purpose/Summary: The Trust, as part of the Leicestershire, Northamptonshire & Rutland Payroll Consortium is changing payroll service providers with effect from April This will affect approximately 75% of the workforce. This paper provides the Board with an update of the process of transition, highlights the risks associated with the transfer of service provider and clarifies how these risks have been mitigated. Relevance to PCT Assurance Framework: Supports the delivery of our strategic objectives and addresses Standards for Better Health core standard C7a & c. Resource Implications Financial/Workforce: Current additional capacity to complete the outstanding payroll issues due to Agenda for Change has been identified. Two agency staff have been recruited for a fixed period of two months. Their remit is to manage the backlog associated with Agenda for Change, which will minimise risk and facilitate a smooth transition to the new payroll provider. Indicative costs for the external payroll service provision are 85,000 per annum. It is anticipated that year on year savings will be realised through the transfer of services to the new provider, although this will be dependent upon streamlining processes and improving systems through the use of electronic submissions. Recommendations to Trust Board: The Board is asked to note the report.

2 Provision of Payroll Services from April Background 1.1 Historically, Northampton Primary Care Trust (PCT) and Northamptonshire Heartlands PCT commissioned the provision of payroll services from Northamptonshire Healthcare Trust. During the 2004/05 financial year all three organisations became part of a payroll consortium within Leicestershire, Northamptonshire & Rutland (LNR). Other consortium members were University Hospitals Leicester, Leicestershire Partnership Trust, Leicester City and County PCTs and the LNR Strategic Health Authority. The role of the consortium was to facilitate the procurement of a new external payroll provider. An additional benefit was that the trusts within the consortium became Wave 1 sites for the implementation of the Electronic Staff Record (ESR). Due to the introduction of ESR, however, there was a 12-month delay in the process of procurement (during which time existing contracts with Supporta and UHB were extended). In June 2006, following an extensive procurement exercise a new contract for provision of payroll services to the consortium was approved by the Payroll Strategy Group on behalf of the consortium, and awarded to Capita from April The work associated with the procurement exercise was managed through the Payroll Strategy Group (PSG), which included representatives from Finance, Human Resources and Procurement from across the consortium membership. A sub-group of PSG members undertook the assessment and evaluation of tenders. The monthly PSG now serves to oversee implementation and to report back progress and identified risks to organisations. 1.3 To address the issue of effective decommissioning of the existing contracts ensuring the maintenance of payroll during the remainder of those contracts and to effectively manage the transition to Capita, a full time permanent Payroll Contract Manager has been appointed. The post was approved by the respective Boards of consortium members and is hosted by University Hospitals of Leicester (UHL). All organisations party to the contract jointly fund this post. The cost to Northamptonshire Teaching PCT is approximately 4,500 per annum. 1.4 From 1 st April 2007 the payroll service will be provided from Capita s offices in Cambridge with back up support from the Blackburn office. When the contract was awarded to Capita in June 2006, they indicated that a 9-month mobilisation period was adequate to complete a due diligence exercise, a knowledge transfer process and to establish an effective payroll service for the consortium from the first day of contract. 1.5 Daventry and South Northamptonshire PCT were not part of the consortium, and therefore still receive their payroll service via Northampton General Hospital NHS Trust. As such, employees of Northamptonshire Teaching

3 PCT previously employed by Daventry will not be affected by the change of payroll provider at this stage. It is envisaged that as their records are formally transferred onto ESR in August 2007, as part of Wave 9 implementation of ESR, a review of their payroll provision will be conducted. 2 Developments 2.1 Capita has established an implementation team, who are working closely with the Payroll Contract manager, and thereby LNR organisations, to assist in the development of governance arrangements and support structures to facilitate implementation. The project is running to Prince 2 principles. A Project Initiation Document (PID) has been developed by Capita, which establishes the process for mobilisation of the service. 2.2 A Mobilisation Project Group (MPG) has been established the MPG consists of representatives from each organisation with responsibility for ensuring full engagement with the process within their own organisation. Within Northamptonshire Teaching PCT this is being managed through HR and Finance, under the leadership of Magi Hoppitt, Associate Director Human Resources. 2.3 During the procurement process the constituent organisations recognised the need to work collaboratively on the mobilisation, and during the life of the contract. This collaborative working had already been successfully demonstrated through existing agreements regarding a proportionate sharing of costs in, for example, ESR implementation. Through the PSG, UHL has been accepted as the lead body for the development of the contract, formalised through a binding agreement signed by all consortium members. 2.4 Capita have liaised with Supporta payroll services (Supporta presently supply payroll services to the majority of the health economy including ex- Northampton PCT employees) and University Hospitals of Birmingham (servicing ex-northamptonshire Heartlands PCT employees) with regard to ensuring the best possible handover of services and information. Risks in relation to this are identified below. 2.5 A due diligence exercise examining activity levels and data supplied by trusts was satisfactorily completed in December Risk/risk mitigation issues 3.1 Capita has neither NHS nor ESR experience; however, Capita use an ORACLE HRMS Information Technology system for payroll delivery. This is the same system upon which NHS ESR is based, but with ESR further elements have been developed and / or modified to support NHS terms and conditions. Accordingly whilst these modifications primarily relate to the interface screens, Capita staff will still need to be familiarised with the service. 3.2 In an ideal situation the provision of a full parallel payroll run prior to go live would be available. After extensive consultation and lobbying however,

4 McKesson (the commercial suppliers of the ESR system) have concluded that it is only viable for them to provide a full copy of production at a prohibitive cost of approximately 2m. Instead McKesson have made a schedule of bespoke training and pre / post implementation support available to Capita. 3.3 Capita and the consortium are currently examining alternative less encompassing options for running a pre go-live payroll run. In order to minimise the strain on the first Capita payroll run it was agreed at PSG to consider how to generate as clean a possible payroll for April This would require that member organisations ensure that all general claims (expenses, travel etc.) are fully up to date and submitted for payment in time for the March payroll and that a minimal number of claims are placed within the April payroll. Briefings for staff across the Consortium will be developed to ensure that staff and managers are kept abreast of developments and of any action, which may be required of them. 3.4 The risk associated with Capita s lack of NHS experience is mitigated by their significant presence in the public sector managing payroll for multi-site and complex organisations. Information exchange and workshops to familiarise Capita payroll staff with NHS processes, Terms and Conditions, structures and reconfiguration (subsequent to Commissioning a Patient Led NHS) has commenced. The workshops, which are running from November to February, are seeking to share best practice, maximise standardisation and to identify areas for potential efficiency improvements either during implementation or for future exploration. Workshop attendance covers senior Capita staff, Trust and Audit representatives. Workshops topics are: Finance and Audit activity Pre go-live Parallel payroll run contingency planning Payroll forms standardisation Enquiries handling Payroll interface with HR Document management Payroll handbook confirmation 3.5 Capita have already recruited senior staff, including those with previous NHS and ESR experience, to support implementation and operational staff to provide the service with further appointments of payroll staff occurring through January and February. An established induction and training programme is in place for Capita staff with additional bespoke training covering the use of the Electronic Staff Record (ESR). Action to ensure that Capita have access to the NHS net is advanced with connection to the service almost complete. 3.6 Decommissioning of the existing payroll providers remains challenging. Both existing payroll providers - Supporta and UHB have indicated that additional decommissioning costs may be levied against all organisations and have yet to specify the extent of these costs. Concerns are also focussed upon the completion of year-end responsibilities, the completion of pensions records updates, management of existing Agenda for Change arrears, overpayments and the timely transfer of electronic and hard copy information.

5 3.7 Growth strategy Capita remain keen to demonstrate that they are able to pursue NHS business and that the provision of the LNR Consortium service represents Capita s first entry into the NHS market. To date they have demonstrated that there is sufficient management capacity to ensure performance of the contract. 3.8 Costing Model The model for the contract shows year on year reductions following year one. These are predicated on working with Capita to ensure that the tendered prices for subsequent years can be achieved through process redesign. This remains an important challenge for the wider health community, particularly with the current organisational reconfigurations and possible further change. Year one indicative costs are for the Capita service with an additional 4500 for the Payroll Contract Manager. It should also be noted that all partner organisations, and thereby any successor organisations, as signatories to the original tender process are contractually committed to the contract for, at least, the initial period of three years. 4 Next Steps & Implications for Staff 4.1 Over the next few weeks managers and administrators will be provided with details of the new payroll system, including a detailed payroll manual and copies of the revised payroll forms. They will also be asked to attend a workshop, which will clarify the procedures for the future and highlight their responsibilities to facilitate an effective, high quality payroll service for our staff. 4.2 A Communication to all staff affected by this change (i.e. staff previously employed by Northampton PCT, Northamptonshire Heartlands PCT and new employees since 1 st October 2006) will also be circulated shortly to keep them informed of the new system and to highlight their responsibilities. 4.3 Staff who were previously employed by Daventry PCT will be advised that their current payroll service will continue until further notice.