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Postmaster Contract Termination
Decision Committee
David Southall, Head of Contract Management & Deployment
6 June 2024
Attendee:
Ross Borkett
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Introduction
Post Office Ltd has policies governing the management of its
contractual agreements with postmasters. These policies
explain that, in certain circumstances, there may be
situations where Post Office needs to terminate a
Postmaster’s Agreement. To ensure our policies are
implemented as fairly as possible, as well as providing the
proper support to Post Office colleagues who implement the
policies, additional governance is needed on these
decisions. To this end the Postmaster Termination Decision
Committee is being set up as approved through Post Office
governance (IDG, GE, RCC and ARC)
The purpose of this session is provide an overview of both
the general contractual provisions that surround these
decisions as well the policy that supports the decisions. In
addition to this it will explain the committee meetings itself
with a further session being arranged to provide a practice
run through with a live example.
POST
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Route to Completion
Overview
=
P03 (2024/2025)
Committee
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Part One — General Contractual Provisions
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Postmaster Contracts — General Provisions
+ The term ‘postmaster’ may refer to a limited + Postmasters and Post Office are responsible for
company, partnership, limited liability partnership deploying their respective obligations as set out
or individual that contracts with the Post Office in in their contract Rev Documents
its or their capacity as a postmaster in the
network + Apostmaster is not obliged to offer ‘personal
service’ and how they deploy these obligations
+ From humble beginnings where a postmaster may differ (for example through the use of staff)
signed for an appointment and were given
instructions and books of rules covering the + There are two parts to the Main and Local
transactions they would perform at the branch contracts — the Preface (the page the postmaster]
we now have, broadly speaking, three contract, signs and contains branch specific detail e.g.
types ~ Subpostmasters Contract (SPMC — the opening hours) and the Standard Conditions
SPSO) Main and Local (which contain the terms)
+ There are variations amongst these and + The SPSO contract is one document which the
additional contract types (Independent Franchise postmaster doesn't sign (instead they sign an
Agreements, Community) and addendums to acknowledgement of appointment on the day the
them (hosted, partner and mobile outreaches) of appointment).
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Postmaster Contract — Decision Making
In taking any decision in respect of a postmaster's contract Post Office needs to exercise any discretion in accordance with the
obligations of fair dealing, transparency, co-operation and trust and confidence ensuring the following are considered
Duty of ‘Good Faith’ - both Post Office Ltd and the
postmaster to act in good faith in the performance of its
obligations and exercise of its rights under the contract.
The decisions taken by Post Office Ltd must not be taken
, irrationally or capriciously and not without
reasonable and proper cause
Post Office must not itself be in ‘material breach of duty’
(for example has any action or inaction by Post Office given
rise to the matter that is being considered).
Good Faith - This is a legal concept that relates to how the
parties must behave. This means that Post Office (or the
postmaster) is not entitled to act in a way that would be
considered commercially unacceptable by reasonable and
honest people.
Capriciously - This is generally taken to mean acting in an
erratic and unpredictable manner, subject to whim,
Arbitrarily - This is generally taken to refer to decisions or
actions being taken purely on the basis of the personal
preference of whoever is taking the decision, as opposed to
resulting from any systematic consideration.
irrationally - This is generally taken to mean acting in a way
that is not based on reason or logic.
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Part Two — Contract Termination Policy
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Purpose
The Postmaster Contract Termination Policy is in place to support the decision making process in determining whether to terminate
the agreement we hold with a postmaster and sets out clear guidelines to support that:
+ arreview is carried out to establish the applicable facts before Post Office exercises any termination rights, to provide the
postmaster with the opportunity to identify and address any issues of concern and to determine whether Post Office has the right to
terminate;
+ consideration is given to the post master's particular circumstances before deciding, acting in good faith, that Post Office should
terminate the contract;
+ termination only happens when it is necessary and alternatives have been considered; and
+ termination only happens where Post Office has reasonable and proper cause and Post Office itself is not in material breach of
duty in respect of matters that give Post Office the right to terminate.
It also sets out the need for Post Office to handle these situations in good faith and apply the principles of faimess, transparency, and
professionalism
The policy is reviewed and approved annually through RCC and ARG (last approval given on the 27 November 2023)
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Key Roles
Contract Advisor
+ Responsible for deploying the procedures set out in the policy.
this would normally mean holding a meeting with the postmaster to seek further information
+ Completing the Contract Termination Decision Rationale before recommending the termination of a postmaster's contract.
+ Considering the options available as an alternative to termination (captured in the Decision Rationale)
Postmaster
+ Being transparent and open towards Post Office
+ Ensuring they respond to written correspondence and telephone calls in a timely manner in order to assist the Contract
Advisor in reaching a decision.
+ Being flexible and available for meetings with the Contract Advisor.
+ They may contact their NFSP representative to support them through the process or arrange legal or other support
Head of Contract Management & Deployment
+ Accountable for the deployment of the policy and supporting Post Office personnel who carry out actions under the policy.
Postmaster Contract Termination Decision Committee
+ Gathering as much preliminary information as possible relating to the issue which has caused termination to be considered,
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Review Before Termination
When considering termination of a postmaster's contract Post Office must carry out a thorough review before exercising any termination
rights. This review will be completed by the Contract Advisor and allows Post Office to establish facts and gives the postmaster the
opportunity to identify and answer any issues of concern. This will include the Contract Advisor seeking further information from the
postmaster through written correspondence, telephone conversation(s) or face to face meetings (either in person or by electronic
means).
To support this review, and whenever termination of a postmaster's contract is considered, the Contract Termination Decision Rationale
document is completed by the Contract Advisor. This document sets out:
a) The background
b) The review undertaken
©) The outputs of any meetings
4) Breaches of contract Kay Docunient
) The recommendation and rationale behind the decision to be taken
Itis used as a basis for establishing:
a) Whether Post Office has the right to terminate the contract; and
b) Iso, whether Post Office considers, acting in good faith, that it should terminate
the contract or not.
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Legal Assurance
The Decision Rationale will be reviewed by Post Office Legal Services to determine any risk associated with Post Office taking a
decision to terminate a postmaster’s agreement.
This review will look to ensure that, as presented by the content in the Decision Rationale, that Post Office:
has complied with the process of review (specifically in retaining all evidence gathered through the investigation and providing
a)
same to the postmaster).
b) whether the decision being taken is at risk of being challenged for being arbitrary, irrational or capricious
) whether the decision is procedurally flawed
They will not make the decision, but will articulate any risk in the proposed decision
and provide advice.
Key Document:
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No Material Breach by Post Office
Post Office must consider whether it has complied with its own contractual duties in relation to the matters relevant to the reason for
termination and this will be set out in the Decision Rationale, specifically asking whether any action or inaction on he part of Post
Office Ltd has directly led to the issue on which itis relying to terminate.
If Post Office has materially failed to comply with its own contractual duties in relation to the matters relevant to the reason for
termination, it is not entitled to terminate on notice. Relevant matters will depend on the reason for termination but might include:
a) Whether Post Office has complied with its duty to provide adequate training and support to the postmaster.
b) Whether Post Office has complied with its duty to investigate shortfalls; and/or checking if there were any known issues with
Horizon (in the case of shortfalls).
‘Aminor or trivial breach of Post Office's obligations would not be deemed as a material breach for these purposes.
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Termination Provisions — Immediate Termination (Without Notice)
Post Office can terminate a postmaster's contract immediately and without notice but only where one of the following criteria has been
met:
a) There is an immediate termination right in the contract for a specific event; and/or
b) There is a repudiatory breach of the contract by the postmaster.
Repudiatory Breach
Arepudiatory breach is one that is so serious and fundamental to the contract that it cannot continue and, generally, these breaches
are not capable of being remedied. Examples may include:
a) Where the postmaster is bankrupt or insolvent.
b) Sustained non-compliance by the postmaster following the issuing of written directions by Post Office.
c) Where the postmaster has admitted theft of Post Office funds.
d) Where the postmaster no longer holds a valid property interest.
As part of the Decision Rationale the Contract Advisor will set out the clauses in the contract that have been breached with a narrative
setting out why the breach is repudiatory and provide analysis of why something not capable of remedy.
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Immediate Termination Rights
Termination Provisions — Immediate Termination (Without Notice)
Locals and Mains contracts contain express rights for Post Office to terminate immediately on the occurrence of particular events. The
following is an example of some of the immediate termination rights contained in these contracts.
Part / Clause ref
Part 2, Clause 16.2.2
Part 2, Clause 16.2.3
Description
A repudiatory failure to provice Products or Services to the required
standards
Ceasing to operate the Basic Business
Part 2, Clause 16.2.4
Provision of false or misleading information or omission of any material fact
prior to entering the Agreement
Part 2, Clauses
16.2.5 — 16.2.9
Part 2, Clause
16.2.10
Part 2, Clause
16.2.11
Insolvency events
Failure to acquire or enter inte a Valid Property Interest prior to taking up
eccupation of the Branch Premises
Changes to the use of the Branch Premises in contravention of the terms of
the Valid Property Interest
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Termination Provisions — Termination on Notice
Post Office can terminate a postmaster’s contract on notice as long as it has considered all the applicable facts and has reasonable
and proper cause. Examples of this may include:
a) Breach or breaches by the postmaster which do not amount to a repudiatory breach.
b) Post Office considers that the relationship with the postmaster is no longer working,
c)_ Where Post Office no longer requires the branch to be operational for commercial reasons,
d) Where Post Office wishes to remodel or restructure the branch and the postmaster does not wish to run a remodelled or
restructured branch
Notice Period
Where Post Office decides to terminate a post master's contract on notice, it will need to consider what period of notice is appropriate
to give the postmaster.
a) The upper limit (the maximum notice Post Office will be expected to give to a postmaster) for notice periods is typically 12
months
b) The lower limit (the minimum notice Post Office will need to give a postmaster) varies by contract type.
An assessment needs to be undertaken to determine the appropriate notice period in each case and factors taken into account may
inolude the length of service of the postmaster, the level of investment made by the postmaster in purchasing the Post Office branch
and the reasons why Post Office want to bring the contract to an end
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ontract Advisor Review (c)
on rationale
ing meeting
completion
ment & Deployment
Stage Eight (a) — Decision Challenge Period
je Eight (b) — Training and Reinstatement Period
t%+tsy
Two — Contract Advisor Review (a)
rds and seek information from relevant
teams
Contract Advisor Review (b):
with the postmaster (plus their
Stage Three
Hold me
‘epresentation/support)
Six — POL Legal Assurance
"ff (Postmaster Contract
Termination Decision Committee)
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Part Three — Postmaster Contract Termination Decision
Committee
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Purpose
The purpose of the Postmaster Contract Termination
Decision Committee (‘Committee’) is to review and provide
concurrence on decisions taken in respect of Postmaster
contract terminations (and in the case where a contract has.
been suspended also take a decision on contract,
reinstatement), ensuring that any decision taken is done so
within a legally and procedurally compliant, and ethical
framework.
Duties & Responsibilities
‘The Committee shall
1. Review all recommendations to terminate a Postmaster's
‘Agreement and, if the decision has been taken in line with the
relevant contract and Post Office policies, approve.
Il. Review all recommendations to reinstate a Postmaster's
Agreement and, if the decision has been taken in line with the
relevant contract and Post Office policies, approve
Ill, Ensure that the relevant team has been engaged with and there
is a clear line of sight on the actions required.
IV. Ensure the lessons learnt from the Committee are shared with
the appropriate team(s) and monitor progress to completion.
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Meeting Preparation
(iacays in advance of the meeting the following is provided to the committee for review in advance of the
eeting:
a) Executive Summary
This outlines the matter that is being referred to the committee for review (forms part of the decision rationale
document)
b) Postmaster Contract Termi
This document sets out
+ Details of the branch
+ The review undertaken by the Contract Advisor and associated findings
+ What the breaches of Agreement may be
+ The recommendation being made in respect if the Agreement, criteria that have been considered
and the rationale for the recommendation
The Decision Rationale will have hyperlinks to a Sharepoint site that contains all the material used by the
Contract Advisor in making their recommendations
£) Post Office Ltd Legal Assurance Review document
POL Legal will have reviewed the Postmaster Contract Termination Decision Rationale, the purpose being to
determine any risk associated with Post Office taking a decision to terminate a postmaster’s agreement,
assessed as either low, medium or high.
Postmaster Contract Termination Decision Committee
Key Documents:
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The Meeting
The committee consists of the Chief Transformation Officer, Postmaster Experience Director, Supply Chain
Director as quorum members who carry a voting entitlement.
In addition to this a representative of POL Legal will attend as well as the Head of Contract Management &
Deployment to present each recommendation and answer any questions. Head of Contract Management &
Deployment will act as a non-voting chair.
Key Document:
The meetings will be run on a monthly basis (pre-arranged and already in people's diaries — 2 % hours) it
may mean that if there are no decisions to review these will be cancelled. Meetings will most likely be held byI
Teams but may be held in person. if held via Teams a recording of the meeting will be made
Having reviewed the material provided in advance, the meetings will be a means by which the committee canI
discuss the recommendations presented to them supported by POL Legal and ask questions of the Head of
Contract Management & Deployment.
Any decisions will be passed by majority. It may be that the committee will need further information outside of]
the meeting in which case the Head of Contract Management & Deployment will source and provide (with
subsequent decision taken through correspondence).
Notes will be taken by the Head of Contract Management & Deployment which will capture decision taken,
any outputs and improvement opportunities.
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Post Meeting
Notes will be shared with the committee members for concurrence and authorisation. These notes wi
Output of reviews of any contract termination decision.
i
Output of reviews of any contract reinstatement decision,
ii
iii, Lessons leamed.
Recording of the meeting (if via Teams), notes and outputs will be saved to Sharepoint - Postmaster Contract Termination Decision
Committee - Committee Meetings
Key Document:
Postmaster Contract Termination Decision Committee — Meeting Notes (to be added)
Contract Termination Decision Committee