Dartford Borough Council has outsourced its entire HR and payroll function in a deal believed to be one of the first of its kind.

The Kent authority, with 400 employees, had five HR staff and one worker in payroll before signing the deal with Northgate. But from April, HR processes will be carried out using the Resourcelink intranet system, with back-up from one Northgate employee on site and others providing remote support.

Steve Brooks, head of finance and resources, who will handle the outsourced relationship in a five-year contract, said that the deal was conceived after an organisational “health check” put the spotlight on HR’s performance and efficiency.

“When we asked our managers what was making their lives easier and what was making them more difficult, it revealed quite a level of dissatisfaction with the existing HR service,” said Brooks. “HR’s workload seemed to run in peaks and troughs, which did not help efficiency. We believe the deal we have with Northgate will make the service more responsive and resilient.”

Brooks estimates that outsourcing will save the council £50,000 a year. The move did not result in any compulsory redundancies, and only one member of staff was transferred under Tupe. Brooks denied that the move would mean the council would miss out on the strategic element of HR.

“It’s quite the opposite: I think the deal will help us to gain strategic expertise,” he said. “As a small employer we weren’t able to attract staff at that level, but now we will have access to all those elements at Northgate,” he said.

Experts have warned that such deals may become more common.

“Moves such as this will become the norm, as councils seek to save money in a tougher economic climate,” said Anthony Pierce, associate director for London HR at recruitment firm, Hudson. “However, a concern is that it could be seen as a retrograde step, following years of campaigning from the industry for HR to be taken seriously at board level.”