Last week, the public inquiry into the Horizon Scandal heard that the Post Office had a standard practice of releasing permanent staff and then rehiring them as contractors with inflated pay rates
Jane Davies, who was chief people officer of the Post Office between December 2022 and June 2023, said that she became aware of this practice, known as “flipping”, early on in her tenure. The majority of the time, it was IT staff who were fired and then rehired at a two-to-three times higher salary.
Davies said to the inquiry: “On the first day I started working at POL (1st December 2022), the IT department informed me of the practice of converting permanent employees into contractors.
(sometimes by way of settlement agreement) and re-engaging them as self-employed consultants/contractors.”
The Post Office IT team at the time was working on an initiative to replace Horizon, a system operated and designed Fujitsu. Fujitsu employees and Fujitsu’s faults in Horizon had led to hundreds of subpostmasters being falsely accused of fraud since the beginning of 2000.
In her statement Davies stated that flipping was “not a good use of money or a proper management by POL”. She said that the contractor roles did not undergo a formal approval or review of daily rates, as would have happened with permanent employees. She said that individuals who had been friends or former co-workers of many department employees agreed to excessive daily rates. She continued: “POL lost its permanent talent by converting to contractor status. This resulted in additional backfill cost to POL.”
Davies explained to the Post Office group executive that this practice was “highly uncommon, non-compliant” with many of POL policies and that it created a risk with HMRC. She also said that it “was not an appropriate talent strategy for POL, and could result in negative PR.”
Davies, after receiving messages that implied the group executive would continue the practice, escalated her concerns three times to CEO Nick Read, noting that “the IT Department was out of control in terms of spending and decisions.”
This was done deliberately to prevent the individual from bringing a legal or grievance against POL.
She told the inquiry about a case where a senior IT Manager who earned around PS120,000 per annum and had worked at the Post Office for 7 years was released as part of a settlement. The following week, he was brought back as a contractor earning PS1,500 a day (PS360,000 yearly). She claimed that Read denied any knowledge of these costs.
Did not intervene when told about them.
Davies claimed to have seen an email exchange between Read, the group executive member, and Mladenov.
Backdated to November 20,22, it revealed that Read knew about the arrangement and had approved it. It was confirmed that the action was deliberate, and was taken to prevent the individual from filing a complaint or
“I’m going to take legal action against POL,” said she.
Davies also described how her onboarding with the Post Office, starting 1 December 2022, had been “inadequate”. She stated that “there was a refusal to provide any written documentation. Instead, I received verbal updates via Microsoft Teams calls which were primarily focused on providing me details about the board and executive characters. ”
It was revealed this month that the Met Police is expanding their criminal investigations against current and former Post Office employees as well as civil servants, lawyers and civil servants.
The public inquiry heard the closing statements of the organisation on 17 December, during which it said that its new leadership was “committed” to make the necessary changes to restore confidence in Horizon and to ensure nothing like this (the Horizon scandal) will or can ever happen again.
Computer Weekly first revealed the Post Office scandal in 2009. It told the stories of seven postmasters who suffered from the mistakes and misuse of accounting software.
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