POLICY DOCUMENT- Contract Breach
Reference information
POL00086865
POL00086865
Contracts and Policy Manager) Jessi
Craig Tuthill (Head of Network Si
Change Operations Manager}
stakeholders
Policy type Contract Breach
Ref. Work Package #4
Date 4" February 2014
Status Final version
Author Sarah Ryan
Owner Paul Inwood VW
Version 4" February 2014
authorisation
date
Review Date I 01/04/2015
Expiry Date N/A
Key John Breeden / Lin Norbury (Contract Dep! 1m), Paul Inwood (Agent
‘odric Williams (Legal Services)
ngela Van Den Bogerd (Network
Approval
Role Name(s) Date
Business Legal services, Cgptratt Di ent Team, Network 04/02/14
input Change Oper jarrager
Assurance 31/01/2014
Authorised 04/02/14
Version control
Version No. Reason for issue Date
Version 1, irst d 12.11.13
Versiong.0 econd draft 13.01.14
Version inal version 04.02.14
SUBJECT: Agent Contract Breach
1. Executive summary
This policy document sets out how decision makers within Post Office Limited (POL) will act in relation to
breaches of contract by Subpostmasters operating Traditional Contracts and Operators of the new
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Model Agreements. This policy advises the appropriate action to take when dealing with breaches of
contract and provides clear criteria by which decisions should be made.
2. Scope
The scope of this policy includes any material (serious) breaches by Subpostmasters and Operators of
New Model agreements. However, it should be noted that a succession of non-material breaches may
constitute a material breach. There are references throughout this policy to non-material breaches
however the Contract Deployment Team should also refer to the established correction action process.
3. Glossary
Word/term Definition
Agent(s) Encompasses the terms Operator and Subpostmaster
Assistant This is an employee of a Post Office Ltd Agent who is re}
the Agent with Post Office Ltd, to deal with Po:
transactions and information.
Material breach Aserious breach of the Agreement be
the Operator which could entitle POL to
terminate the contract if there are
e Li
Office Limited and
Network
Transformation
New model(s)
NFSP
Non- material
breach
Non- remediabI each which prevents corrective action from being effective
Operator fers to the Legal entity contracted to run either a Main PO
ocal PO or Community PO.
POL Post Office Limited “we”
Remedial Corrective action that can be taken to resolve an element of the
contract that is not satisfied
Subpostmaster The holder of an SPSO Contract and includes the term
Subpostmistress.
4.0 Introduction and purpose
4.1 Introduction
The formal roll out of the Network Transformation Programme (NT) began in 2012. The Government
initially committed funding of £1.34 billion to transform 6,000 branches into new model branches, and
have subsequently provided funding of £640 million (subject to state aid clearance) to transform the
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rest of the network. These branches will operate on the New Model Agreements which contain terms
and obligations on Operators that do not appear in the traditional contracts. As such, a policy is required
to deal with breaches of contract in the new models and traditional contracts.
4.2 Purpose
The purpose of this policy is to provide clear direction to assist the Contract Deployment Team to deal
with breaches of contract by Agents. This is a prescribed approach, which aids the decision making
process, by outlining the criteria to be used by the Contract Deployment Team, Agents Contract
Deployment Managers and Appeals Managers, before reaching a decision.
5.0 Background
This policy mandates what decisions are to be made, by whom and how. This pofigy chang:
requires systemic and behavioural change but does not require contractu inge.
6.0 Change proposal
In an Agent's lifecycle, many events may occur and it is imperativgfhat thi ts Contract
Deployment Teams engage in dialogue with the Agent to un e whole event and
particularly in the context of breaches of contract, why the ev . They should then reach
appropriate decisions based on that dialogue. The polic ing processes set out the
following:-
- The primary decision that needs to bg
- The basis on which these decisio!
- The person within Post Office
The policy is to be used by the Deployment Teams, Agents Contract Deployment
Managers and Appeal Mana; loes not require any changes to be made to the contractual
agreements, neither ne\
6.1 Intervention
Interventiot
Team.
- Exa Intervention Events: indications that the Agent may not be performing their
contract properly and/or customer complaints.
- Decision maker: Before any action is taken the Contract Deployment Team must first
decide whether an Intervention Event has actually occurred. This should be achieved
through discussions with the Branch Standards Team and/or Audit teams.
6.2 Consequences of Intervention Events
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When an Intervention Event occurs, it will usually lead to support intervention from POL to the
Agent. Any support provided by POL is likely to be in the form of telephone-led training for the
Agent, or a visit to the branch to discuss how to improve performance.
The aim is to produce an agreed action plan for the Agent to improve their performance.
If there is no improvement, or a succession (more than three) of minor breaches, this may
constitute a material breach and could lead to termination. This would be dependent on
circumstances and at the discretion of the Contract Deployment Team and advice should be
sought from Legal Services in this instance. A non-material breach will be recorded on the
Operator's record for a 24 month period, after this time, any further non-materi@kbreaches will not
accumulate to a material breach.
For breaches that require 14 day remedial action by the Operator, thisgan bt rodthed by using
the appropriate letter found at the bottom of this document, with g#foll p Wisit or call after 14
days, where necessary. If the breach is not remedied within 1: ther @ction will be required,
this will be dependent on the facts of each case and guidance Should b@sought from Legal
Services.
The Contract Deployment Team will need to decid#@ the gype @hsupport intervention, if any, that is
required. This should be achieved through discuss ‘withg@he Branch Standards Team and/or
Audit teams.
6.3 Escalation Events
Escalation Events are circumsta' fere a Serious breach is identified which requires POL to take
immediate action.
- Examples of 's include but are not limited to: adverse audit findings; breach
essibility issues for disabled customers; non-registration of
Assistant: ht to occupy premises; breach of data protection or confidentiality
orised change to opening hours; not complying with regulatory
or training; not attending training provided by POL.
- Deci: faker: As the action taken by POL is likely to be more significant for serious
breaches, it is imperative that the Contract Deployment Team are satisfied that the action
they propose to take is commensurate with the breach that has been
suspected/confirmed. This should be discussed with the Branch Standards Team and/or
Audit Team and legal advice should be sought where appropriate.
6.4 Consequences of an Escalation Event
Once the Contract Deployment Team have identified that an Escalation Event has or may have
occurred further investigation of relevant issues and circumstances may be required.
7.0 Investigation and Suspension
The default position when a breach has been identified should not be suspension, and POL will only
precautionary suspend where the contract gives rise to an ability to suspend and:
(i) Further investigation is likely to be difficult or impossible without it; or
(ii) There is a significant risk to POL brand or POL cash/stock.
In reaching a decision on precautionary suspension POL will take into account all relevant factors,
including but not limited to, the following:-
(a) Risk to POL funds;
(b) Risk to POL brand or reputation; v
(c) Impact of suspension on customers; nN
(d) Any relevant information provided by the Agent a:
with the Contract Deployment Team.
rt of lephone conversation
The Contract Deployment Team should decide wI ergen
precautionary suspend the Agent so that they are
should be noted that the New Model Agre
of the assistants involved in the operation &
The Contract Deployment ee t
facts, it is necessary to
InvoI in the operation of the branch. It
{-) ides POL the right to suspend all or any
ich.
je appropriate pro forma and the final decision will
be made by the Agents Contr yyment Manager. A letter should also be sent to the Agent to
inform them of their suspensio
It should be noted
Escalation Event,
ay be circumstances when an Intervention Event is also an
ase Contractual action may be required.
It may no’ ays be
inappropri@te or unecessary, for example, bankruptcy of the Operator. The Contract Deployment
essary for further investigation to be carried out, if it is deemed to be
Team will nel each a decision, based on the individual facts of each case if preliminary
enquires suggest there will be no further investigation and Legal Services should be involved
promptly. The final decision rests with the Agents Contracts Deployment Manager.
The process and decision making criteria will follow a similar route to that of Subpostmasters, but
there will be some key differences;
- Unlike Subpostmasters operating Traditional contracts, POL will not support the use of
Reasons to Urge Interview with Operators of new model agreements subsequent to their
suspension.
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- Operators will be invited for an informal discussion not more than 14 days from the date of
the suspension to discuss matters arising as a result.
- This should not be used by the Contracts Advisor as a fact finding exercise, but an
opportunity for the Operator to discuss the circumstances leading to the breach.
- This informal discussion should not be led by the Contracts Manager and should be an
opportunity for the Operator to present an explanation.
- Any representative brought along to any informal discussion as a consequence of a breach
of contract must only be from the Federation of Subpostmasters, or an employee of Post
Office Limited or an Agent of Post Office Limited.
- POL does not recognise the CWU, lawyers or friends who do not meet the published
criteria to attend any meetings or accompany the Operator. Sensitive information
pertaining to POL operations may be discussed and our primary concern this situation is
to protect the Brand.
- The representative must also not be the subject of any investigatio
It is for the Contract Advisor to exert their judgement in each indj@@iual cdS tojascertain whether
the circumstances and reasons given are pertinent to the reasofis fO&guspension.
7.1 Decision making
In making a decision about what contractual acti ‘ontract Deployment Team will
take into account all relevant factors, including
a) Impact and on-going risk to PO
b) Impact and on-going rig to Pt awd and reputation
c) Effect of termina of€ustomers
je Agent
ition provided by the Agent including any mitigation presented
g) sf the breach (as distinct from the proposed termination) on customers,
supplier and partners
h) Agents history i.e. service length and record, previous written directions etc.
i) Legal advice
The Contracts Team must show their detailed reasoning in relation to the above in the pro forma
and explain why points are preferred and others disregarded.
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There should be no ‘starting point’ in that consideration that begins with one particular outcome as
opposed to others, and where one or more criteria had been ‘weighted’ the reasoning for that
needs to be made clear. Contract Deployment Teams faced with situations that require a more
complex assessment of the circumstances should always seek the advice of legal services.
Unlike Subpostmasters operating Traditional contracts, Operators of the new Agreements who
disagree with decisions made by the Contract Deployment Team, will not be privy to automatic
appeals when a decision has been made to terminate their agreement.
There have been attempts by Subpostmasters following the final decision of an appeals manager
to further escalate individual cases. The correct route for Subpostmasters to tal
dissatisfied with a decision is via civil court action, to do anything else creates a fur
appeal which is not described or supported within this policy. The contract I
subject in that the Appeal Manager decision is final. nN
8.0 Types of Action New Models/Traditional Contracts
Operators of new models may be subject to the folloypin; 10) breach of contract:
(i) Written direction with request foi remedy
(ii) — Written direction (this ma
POL cash/stock and/or the OI
t&Honditions; e.g. Repayment of any missing
gawilling to accept support intervention)
(iii) I Suspended termiffatio,
(v) Termination
Subpostmasters ope ditional Contracts may be subject to the following actions for breach
of contract:
(i) ritten ig
(ii) inal Vitten warning
(iii) Suspended termination — this may be offered subject to conditions
(iv) Three months’ notice to terminate
(v) Summary termination
Operators of New Model Agreements do not have the same terms and obligations as the
Subpostmasters' contract and there are key differences in the types of contractual action that
should be taken.
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The Contract Deployment Team should be aware that it is no longer correct to use the term
‘warning’ in letters to Operators. It is imperative that we digress from phrases commonly
associated with contracts of employment. Operators should instead receive a letter detailing a
“written direction’ of the appropriate course of action they are expected to take in order to remedy
the breach.
The New Model Agreements do not provide Operators the ability to resign to avoid termination;
however either POL or the Operator can give 12 months written notice to terminate. The 12
months' notice cannot be given so as to expire before 12 months from the start date. But, if POL
and the Operator agree, less than 12 months' notice of termination can be given.
9.0 Proportionate outcomes and suspended termination
Any decision made by the Contract Deployment Team must be commensate e severity of the
breach. The Contract Deployment Team should assess and investigatage f pligations of taking
contractual action and give due consideration to the other, often I re, OI \s available to them.
Whilst termination may be necessary in circumstances where there substantial risk to POL cash and
stock, the use of suspended termination may be appropyjat tumstances. This decision
yy Agents Contracts Deployment
Manager. Suspended termination would allow the jnue running the branch.
This approach may be considered appropriaf eré'is a clear breach of contract, and an action
or omission by the Agent does warran a put evidence is presented that suggests there is
posed termination) on customers, suppliers,
Subp®stmaster/Operator and Assistant theft). In this
consider termination of the contract but suspend that
instance, the Contracts Advist
termination for a period
If further material ommitted in the 12 month period the Contract Deployment Team
may decide to co! inating the Agents contract with immediate effect.
Furthermdfe, the Agent must comply with whatever conditions the Contracts Advisor determines,
be that att@gdanceffor re-training, exclusion from a branch of named Assistants/managers and/or
improvemen' ternal monitoring processes. These would not be designed as a punishment but
as a means of rectifying weaknesses without which risk to Post Office cash, stock or reputation
could continue.
10.0 Recording Database
It is essential that the Contract Deployment Team ensure that an accurate record of the breaches
is maintained as they occur, with a clear audit trail to show the decision making process, including
ratification by the Agents Contracts Deployment Manager in addition to any evidence that was
presented by the Agent. This should be recorded in the format of a database that is currently being
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developed. This will greatly assist if any challenge were to be brought against POL, legal or
otherwise.
5.5. Process
Process maps to assist the Contract Deployment Team with their decision making are embedded in this
document [to 3] and should be consulted for every case.
7. Appl ity
This Policy applies to Subpostmasters, and Operators of New Model Agreements ani
communications and actions via the Contract Deployment Team in response ti ache! ract by
Subpostmasters and Operators.
8.0 Related policies nN
Burglary and Robbery
Changes to Opening Hours :
Appointment of Temporary Agents
Underperformance
Corrective action
PART2
10.0 Standard letters and docum NX
Suspension Template Letter
14 day remedial Template
Process maps
Decision making pro forma
For further advice regarding this policy please contact Sarah Ryan, contact details as follows:
Insert contact details here