BBCT sell-off - first meeting with Siemens

Report on the first meeting to discuss the planned sale of BBCT to Seimens Business Services held on July 8 2004.

Mechanism for the sale

The BBC confirmed that its timetable for the sell-off was unchanged, and management still hoped to complete the sale on September 1. Negotiations with Siemens would continue through July and August, and BBCT would be sold only if the BBC was satisfied with the outcome. However, BBC management expressed confidence that although still being "subject to contract", the sale would go ahead

BBC Governors were due to give final approval to Siemens as preferred bidder in week beginning July 12, and approval for the sale would then be sought from the Department of Culture Media and Sport. Management were reminded that the union had already contacted DCMS and expected full consultation on the sale, which BECTU still opposed.

Formal approval would also be needed from competition authorities, including the European Commission.

BECTU condemned the timetable as too short for meaningful negotiations on behalf of staff, and expressed anger that talks about protection of staff affected by the transfer had been left so late.

Why Siemens?

According to the BBC Siemens had been chosen in preference to Accenture/BT, the other short-listed bidder, because the company had demonstrated a "fit" with BBC culture and values, had prove it could deliver the savings demanded, and was offering a "viable" price for BBC Technology.

Siemens' technology was considered superior in all areas but one, and its plans for governance were preferable.

How much money is involved?

The sum being offered by Siemens was apparently secret, but the BBC confirmed the figure was more than £100m, while the savings on offer were said to be "in excess" of the target £20-30m per year.

An obligation for Siemens to provide the capital funding for the W1 and Pacific Quay projects, believed to be over £200m, was not likely to be written into the contract. However, Siemens were expected to be the preferred supplier, and the BBC was currently discussing a range of options with the company, including an operating lease, and provision of technical facilities through a managed services arrangement.

Who's being sold?

Everyone currently employed by BBC Technology will go with the company, except for roughly 50 staff supporting TV playout in West London, who are due to transfer into BBC Broadcast Ltd.

BBC Technology will continue to employ all staff after the sale, until at some point in the first year, they are transferred under TUPE either to Siemens Business Services (SBS), or to Siemens Communications. About 90% of staff were expected to move into SBS, with the remainder, mostly people involved in telephony and related areas, being transferred to Siemens' communications subsidiary.

Until that transfer takes place, staff will not be protected by the TUPE regulations, although Siemens said that the company would nevertheless observe the "spirit" of TUPE.

Separately, up to 20 staff in BBC News IT in West London, and a similar number from IT departments in Nations & Regions, currently employed directly by the BBC, will transfer straight into SBS, possibly on the date of the BBCT sale, depending on discussions with BECTU. They will not pass through the employment of BBC Technology at any stage, but because they are being transferred from one employer to another will have TUPE protection from day one.

BECTU is opposed to these transfers, and has already begun an industrial action ballot of members in News IT who are affected. Discussions on the Nations & Regions transfers are due to start on July 12.

Are any areas of BBCT excluded from the sale?

Management admitted that although there had been a last-minute re-examination of whether activities like Central Communications Area (CCA) in Television Centre, and Coding and Multiplexing, the department that feeds Freeview with a DTT signal, should be included, all of BBCT's activities would be sold.

The BBC explained that the agreement with Siemens, a "Technology Framework Contract" would allow future transfers of BBC technical activity into the company without having to go through a formal procurement process. When asked whether this meant that parts of News, Radio, Nations & Regions, and World Service would end up in Siemens, management said this could happen "if appropriate", but no decisions had yet been made.

Siemens' vision

One of the reasons Siemens were keen to buy BBCT was said to be the company's plan for a centre of global competence in broadcast and media solutions, based on the skills that exist within BBC Technology. Siemens expected that staff with the relevant expertise would be consolidated into a business unit that would provide support for, and sell products to, other broadcasters as well as the BBC.

Part of this plan would be the re-housing of many ex-BBCT staff in a single Siemens building somewhere in London within 2-3 years after the sale date.

Will staff have to move location?

Apart from those, presumably in mostly broadcast-related areas, affected by the single building plan (see above), neither the BBC nor Siemens could give details of future workplaces. The BBC said that ongoing discussions with the company would identify activities where the Corporation demanded on-site teams in BBC buildings, and these decisions would influence whether or not specific staff remained on the Corporation's premises.

Siemens would not rule out the possibility, over time and with the BBC's consent, that significant numbers of ex-BBCT staff could be relocated.

Are any redundancies planned?

On this issue Siemens' position seemed to be that although none are planned at this moment, there could be redundancies after the sale, driven by the "rationalisation" that the company admitted was inevitable.

However, the company stressed that it had a culture of avoiding redundancies if possible, and that every effort would be made to retrain or redeploy staff in preference to sacking them. BECTU was promised sight of Siemens' formal redeployment policy.

Siemens' managers at the meeting said they had no plan to "slash and burn" after the take-over, and in response to a union demand that there should be no compulsory redundancies for three years, offered a guarantee for 12 months from the date of sale.

Will conditions of service change?

Theoretically, Siemens could choose to table changes in conditions from the moment they take over ownership of BBC Technology, since the move is a company sale, not a transfer of staff where TUPE would apply.

At the meeting though, the company said it would retain most BBC terms and conditions, except where, in their managers' view, the Siemens arrangements were better. The union was given a schedule of all BBC terms, conditions, and benefits, indicating in each case whether they would be retained.

When BECTU asked for a guarantee that BBC terms and conditions would be honoured for three years after the sale, Siemens declined, saying that they regarded terms and conditions as evolutionary, and occasional changes were part of normal business.

The company would, however, negotiate fully with the union if any changes were planned.

For staff likely to transfer into Siemens Communications at some point, the position was less clear - the SBS managers at the meeting believed that local terms and conditions in that subsidiary were a matter for local management. Staff involved in that transfer would, though, have TUPE protection at the point they moved from BBCT to the communications company.

One key provision of BBC terms and conditions, the redundancy formula, will be "retained" by Siemens, but could legally be changed along with other terms and conditions because there is no written guarantee yet that the company will honour any of them for a fixed period after the sale.

What about pensions?

Siemens had clearly put considerable thought into the question of pension entitlement for ex-BBCT staff, and presented details of a new pension plan, to be created in the existing Siemens PLC pension fund, which they said offered benefits "broadly comparable" to the BBC scheme.

Apparently they had to seek approval from the German parent company Siemens AG to offer a final-salary scheme to BBCT staff, since all the UK company's pension defined benefit plans had been closed to new members, and new Siemens staff were entitled only to join a money-purchase defined contribution scheme.

BECTU representatives made no comment on the proposed pension benefits because they wanted to take expert advice on the immense detail presented by Siemens.

Concerns were raised however when Siemens reported that although the Siemens PLC pension fund had passed the government's Minimum Funding Requirement, with 122% of the assets it needs to meet obligations, its own actuaries, in their last three-yearly valuation, had determined that the scheme has only 88% of the assets it needed.

Siemens agreed to give BECTU more information, including the last actuarial review of the pension fund.

If the sale goes ahead, BBCT staff will have the choice of freezing their existing BBC pension, or transferring its value into the Siemens scheme, and accruing further benefits. However, transfers will not be simple case of awarding individuals the same length of service they had accumulated in the BBC scheme. A complex actuarial calculation will need to be performed for every BBCT pension member before they could be credited with previous service in the Siemens scheme.

BBC Pensions had sent a representative to the meeting who confirmed that BBCT staff would remain in the BBC's scheme for as long as necessary after the date of sale to finalise the benefits Siemens were offering, and to calculate individual figures on which staff could make their decisions.

Will the union still bargain on pay, terms, and conditions?

Siemens gave a firm assurance that BECTU will continue to be recognised on behalf of BBCT staff, and there would be annual pay bargaining. A call by BECTU for the company to agree a three year pay formula of increases equal to inflation plus 2.5% was rejected by the company, who said they could not make a commitment over such a long time period.

Siemens' proposition at a glance

• All BBCT staff would remain employed by BBCT for a period after the sale
• Terms and conditions would be "retained", without any written guarantee that they would be honoured
• A new pension scheme will be created "broadly comparable" to the BBC's own
• Some time in the first year, 90% of staff TUPE into Siemens Business Services, and 10% into Siemens Communications
• No compulsory redundancies will occur in the first year
• Depending on the continuing negotiations between Siemens and the BBC, some staff could be required to work on non-BBC tasks, or may be relocated to non-BBC buildings