Virgin Care has signed a £500m community services contract with NHS Surrey under an arrangement which will see staff employed by a social enterprise.

From 1 April Virgin Care will be responsible for delivering services including eight community hospitals in North West and South West Surrey, as well as sexual health services and prison healthcare across the whole of Surrey.

The transfer was originally due to take place by the end of 2011 but complications around NHS Surrey’s estate delayed the due diligence process. Property will now transfer to NHS Property Services Ltd.

Under the plan, staff currently working for NHS Surrey’s provider arm - including medical director Graham Henderson who is the husband of health minister Anne Milton - will not move to Virgin Care. Instead the 2,500-strong workforce, including the executive team, will move to a social enterprise called VH Doctors in an arrangement designed to allow them and new employees to remain within the NHS pension scheme.

HSJ had understood this has been achieved through a direction from the NHS Executive allowing VH Doctors to be part of the NHS pension scheme.

However, HSJ has learned VH Doctors has an alternative provider medical services contract with NHS Hull to provide an out-of-hours GP service in collaboration with Assura East Riding LLP.

As an APMS organisation VH Doctors is an employing authority and existing and new employees have access to the NHS pension scheme. Staff will then work for Virgin Care on “secondment”, allowing them to retain their NHS pensions.

Partner and head of pensions at DAC Beachcroft, Neil Bhan, described the arrangement - where staff are hosted by an employer with access to the NHS Pension Scheme but which was not ultimately providing the outsourced services - as a “backdoor” way of obtaining access to the scheme.

He told HSJ it was not something he would endorse and doubted the DH would promote it as a legitimate way of obtaining continuing access.

Under the Health and Social Care (Community and Health Standards) Act 2003, partners in companies holding APMS contracts must be medical practitioners, healthcare professionals or NHS employees.

Jean Sapeta, head of employment at Hempsons, told HSJ the arrangement was not unusual and allowed Virgin Care to avoid these “prescriptive” requirements.

She added: “I think we are going to see more and more of this as people see the opportunities and get into the appropriate form.”

Staff will continue to use the PCT’s provider arm brand Surrey Community Health for the time being.

Virgin Care, previously known as Assura Medical, beat competition from social enterprise Central Surrey Health and Surrey and Borders Partnership Foundation Trust to win the contract.

A spokesman for Virgin Care said: “VH Doctors does not discuss individual contracts but it is an employing authority which looks after the training and development needs of staff and ensures that their employment terms and conditions can be maintained where TUPE applies.”