The 200 Friends Provident IT workers that are transferring to IBM, as part of the firm's £200m outsourcing deal with IBM, will have to sign new contracts or take voluntary redundancy.
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The IT outsourcing contract, which includes all software, hardware and services, is part of Friends Provident's overall plan to save £40m a year in operating costs.
Trade union Unite, which represents the workers said there will be no compulsory redundancies. "The staff being transferred from Friends Provident can either transfer to IBM or they can chose to take voluntary redundancy," said aspokesman.
But a source close to the deal said that three quarters of the IT staff that transfer to IBM from Friends Provident will lose their jobs. "It is of grave concern to me that this contract will lead to the further decimation of jobs in the troubled financial services industry," he said."Two hundred staff will transfer to IBM but the supplier will almost immediately make 150 of these long-serving staff redundant and will instead outsource the provision to India."
A spokesman at Friends Provident said the company is unaware of IBM's plans for IT workers that will be transferred to IBM under TUPE.
TUPE is industrial relations legislation which protects workers rights when they are transferred to another employer as part of a deal.
"The deal from our point of view involves outsourcing the IT functions that will lead to cost savings. As part of the deal 200 IT staff were transferred under TUPE," he said. The finance firm expects to save £6m a year initially, with more savings to come as the outsourcing contract matures.
"Clearly part of the deal is the transfer of expertise, because these people have been working on the functionality for some time and have knowledge which is very useful," he said.
The fact that the jobs are transferring through TUPE legislation does not guarantee job security if there is an economic, technical or organisational (ETO) reason for making them redundant. Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner, said it is possible for staff transferred under TUPE regulations to be made redundant. "This is regularly seen in the context of TUPE," he said.
He said TUPE still applies but "the economic and organisational practicalities give grounds to make people redundant."