Consultation Meeting regarding Merger of Southern and Gatwick Express

Stephen McHale William Sheils Anne Shippam Richard Constable Ray Cowell Phil Freeman Terry Wicks Adrian Walsh Malcolm Chisholm Dean Langman Roy Luxford Kevin Eade John Doyle Ian Harding Mark Stanbridge John Moore 29 April 2008 Consultation Meeting regarding Merger of Southern and Gatwick Express Please find attached Consultation Document. Please bring this document with you to the meeting listed above scheduled to take place on Tuesday 6 th May 2008. If you have any queries, please feel free to contact me. Kind regards, Dawn Thorn HR Services Manager 020 7023 4328

Integration of the Gatwick Express Limited franchise In to the New Southern Railway Limited franchise Consultation under the Transfer of Undertakings (Protection of Employment) Regulations 2006: TUPE Introduction and Background 6 th May 2008 The current Gatwick Express franchise will end at 0200 hours on 22 June 2008 and will be integrated into the Southern franchise. From that date relevant Gatwick Express employees, and contracts of employment will transfer to New Southern Railway Limited, trading under the name Southern. This integration is a critical part of the DfT s plans to increase seating capacity during the peak periods for train services into and out of London, through the Brighton Mainline Route Utilisation Strategy. From 22 June, Gatwick Express services will continue to operate the same service pattern as today. From December 2008, an extended Gatwick Express service will begin. It will retain the same branding and the same frequency, with non stop service between Gatwick Airport and London Victoria every 15 minutes. However, it will also run beyond Gatwick to Brighton at the busiest times of day. Extra carriages for this service will be provided by the leasing of reconditioned Class 442 s. As this extension will be implemented in December, it is not relevant to the TUPE transfer of Gatwick Express staff in June 2008. However, it will be relevant for the December 2008 timetable change as referred to below. TUPE Consultation Prior to this integration an information and consultation process is required to take place under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Fundamental to the consultation process, both Southern and Gatwick Express acknowledge that TUPE will apply to all relevant Gatwick Express employees and that their employment will transfer on 22 June 2008 from Gatwick Express (as transferor) to Southern (as transferee). Southern envisage all such employees transferring to Southern on 22 June 2008. Southern is obliged to inform relevant Southern staff about the transfer, through their elected representatives, and consult with them regarding the effects of any measures envisaged towards them relating to the transfer. Gatwick Express is also obliged to consult with their trades unions and elected representatives to advise them of any measures which Southern envisage taking as a result of the transfer. It is extremely important to the Southern business to set out a clear vision of what Southern is trying to achieve from a cultural perspective. This can then be referred to in developing and delivering consistent plans to be used in operating the integrated functions going forward.

This will help to avoid confusion, support management of change and align employees behind the business during this period of change. The philosophy for the integration of Gatwick Express into Southern is as follows: a marriage between 2 strong businesses; and two brands, one company The integration strategy recognises two brands with separate customer facing identities working together under the Southern umbrella; learning from each other, sharing best practice and where appropriate taking advantage of synergies and developing common systems. Some of the main themes of the integration strategy are as follows: Southern and Gatwick Express brands Thinking like a passenger both brands retaining their own identity (dual running) business as usual for all customers minimum envisaged changes for employees; and promoting that this is an exciting time for all staff, with staff being actively listened to and involved in sharing and delivering best practice, thus improving customer service Southern plans to adopt dual running from 22 June 2008 until the end of the Southern franchise as a general principle. The proposal is to operate the current Gatwick Express and Southern services side by side and to adopt a dual running logic and approach in all respects for staff working in each brand, whereby Gatwick Express staff will transfer on their existing terms and conditions, subject to the potential measures and practical operational changes set out below.. Southern will monitor the separate customer facing operations to assess how they work in practice and consider requirements for the future. Demands may also be placed upon the businesses by the extension of the Gatwick Express service in December 2008. Practical issues may arise as Southern monitor the dual running process which will need to be dealt with and consulted on where appropriate. To the extent that Southern can now foresee changes upon or relating to the TUPE transfer in June 2008 they have been described as measures later in this document. As Gatwick Express will integrate into the Govia group and become part of the operating Southern network, it is clear that common management structures will exist where Gatwick Express operations fit into the appropriate part of the Southern organisation, with the over riding logic being: there will be a necessity for clear overall leadership direction - the vision Think Like a Passenger should be adopted from day one; it will be sensible to develop common approaches using the experience gained from running the two brands which will help ensure consistency for managers and staff alike. This will enable each brand to benefit from best practice and support cross-business synergies; with the majority of people processes, there will be a need to analyse both brands so that the strengths and impact on staff are better understood. However any outstanding process under the procedure agreements will continue as all employees assigned to Southern from Gatwick Express will transfer.

During the dual running phase, employee involvement will be fundamental in reviewing and designing people related processes, with the aim of adopting best practice or retaining existing approaches depending on overall strategy. We are obliged to provide certain information under Regulation 13 of TUPE to appropriate representatives of Southern staff who may be affected by the TUPE transfer of Gatwick Express staff, or by measures envisaged to be taken in connection with it. In addition, in certain circumstances there is a duty to consult with those representatives. One of the purposes of this letter is to provide you with information which we are obliged to deliver to you as set out below. Supporting this, there will be ongoing communication with staff and their trade union representatives as part of the consultation strategy as outlined below: A. You are advised that the transfer will take place on 22 June 2008, due to the DfT integrating the Gatwick Express franchise into the Southern franchise from that date, and the matters we have already described. B. We are obliged to inform you of the legal, economic and social implications of the transfer for affected Southern staff. As Gatwick Express staff will be transferring pursuant to TUPE into the Govia group, we do not consider that any legal implications exist for Southern staff. Similarly we do not envisage any economic implications for Southern staff. Social implications may include the fact that Southern staff will of necessity need to work alongside transferring Gatwick Express staff. C. Southern do not envisage taking any specific measures directly towards affected Southern staff. However set out below are some proposed reporting line changes and locations changes which will potentially be necessary for transferring Gatwick Express staff. We nonetheless put these forward now as potential measures for consultation with the appropriate representatives of the Southern staff. D. Between date of integration and the new timetable change in December 2008 Southern will take the opportunity to review the organisation and the running of the merged functions to ensure the optimal organisation for the revised service is in place. Any changes will be consulted separately. As a result, Southern cannot at this stage envisage any measures in this regard, whether arising from the TUPE transfer in June 2008 or otherwise. Currently Proposed Reporting Line and Location Changes for transferring Gatwick Express staff Engineering The Fleet Manager, Gatwick to have a change of reporting line to the Southern Engineering Director. Human Resources The Payroll Officer s role is to be potentially absorbed by the Southern Payroll team and HR Systems team, but consultation will need to take place as to the effect on the resulting Payroll

and HR Systems teams. The Gatwick Payroll Officer to initially have a change in reporting line to the HR Systems & Information Manager at Knollys House, Croydon. The Resourcing Officer and Corporate Trainer to have a change of reporting line to Southern Resourcing Manager and Vocational Training Manager respectively and both to transfer location to Knollys House, Croydon, where the Southern HR function is based. Finance The Head of Procurement to have a change of reporting line to Southern Finance Director and a change of location to Go Ahead House, Croydon, where the Southern finance team are based. The Financial Accountant & Treasury Manager, the Finance Manager, Treasury & Accounts Receivable Assistant and Accounts Payable Assistant to have a change of reporting line to Southern s Financial Controller/Financial Analyst & Planning Manager and a change of location to Go Ahead House, Croydon The Retail Accounts Clerk to have a change of reporting line to Southern s Station Accounts Control Manager and a change of location to Go Ahead House, Croydon. Communications Head of Internal Communications to have a change of reporting line to Southern s Head of Communications at Go Ahead House, Croydon. The Team Organiser, Admin Assistant and Customer Relations Representative to have a change of reporting line to Southern s Head of Communications and a change of location to Go Ahead House, Croydon. Safety & Environment The Safety Systems Manager s role to have a change in reporting line to Southern s Head of Safety & Environment and change of location to Go Ahead House, Croydon Directorate The Route Director Gatwick s role to potentially be absorbed by Southern s Managing Director, Operations Director and Commercial Director, therefore it is proposed that the current occupant would be displaced. The current occupant will be required to report to Southern s Managing Director at Go Ahead House, Croydon unless advised otherwise. The Receptionist post at Grosvenor Gardens to have a change in reporting line to the PA to the Southern MD. Commercial The Service Delivery Organiser s role to have a change of reporting line to the Head of Customer Services (Gatwick Express) and it is therefore proposed to transfer to the Commercial function from the Operations function.

The Head of Customer Service to have a change of reporting line to the Southern Commercial Director. The Brand Manager and Head of Commercial Analysis to have a change in reporting line to Southern s Gatwick Business & Brand Manager. Operations The Standards Verification Manager s role to have a change in reporting line to the Southern Operations Standards Manager and a change of location to Go Ahead House, Croydon. The Head of Operations to have a change in reporting line to the Southern Operations Director and a change in location to Go Ahead House, Croydon. The Route Performance Manager, Performance & Planning Analyst and Compliance Control Manager all to have a location change to Go Ahead House, Croydon. The Go via staff travel pass will be extended to include Gatwick Express services. PRACTICAL OPERATIONAL CHANGES The following day to day adjustments are currently foreseen, but may not be exhaustive.. Whilst Southern does not consider these strictly to constitute measures for the purposes of TUPE they are set out below on the basis that they will be treated as measures and consultation will take place in relation to them as part of the process of the TUPE transfer on 22 June 2008. o Gatwick Express uniforms will remain unchanged for uniformed staff o Non uniform staff will have a new name badge design with a dual logo o The Southern name badge will be redesigned and re-issued as dual branded for appropriate staff o Gatwick Express uniformed staff will have a new name badge with a Gatwick Express Logo o Gatwick Express Traincrew will receive training on 442 units in readiness for the December 2008 timetable change o Internal transfer arrangements will be put in place to facilitate business efficient transfers o There will be a combined intranet for Southern and Gatwick Express o There will be a combined staff briefing process o A Share Save Scheme will be available for Gatwick Express staff through the Go Ahead Group E. It is Southern s intention to meet all legal requirements in regard to pension entitlement for current Southern and Gatwick Express employees. F. On Day 1, Southern will prepare a guide for each transferring employee, who will require business process information for day one operation. This will include vital information from all aspects of the business.

We have arranged to meet with all the Southern appropriate representatives to discuss the proposed transfer, and to consult about the measures we have described.