A new code of practice aims to prevent the creation of a two-tier workforce
when local authorities contract out public services.
The code will mean new staff joining the private contractor will be entitled
to pay and conditions that are no less favourable overall than those of staff
transferred from the public sector.
The code does not apply to pensions, but new joiners will have to be offered
‘reasonable’ pension provision, which may be either membership of the local
government pension scheme, a good quality employer pension scheme or a
stakeholder scheme with an employer contribution.
The code will also require contractors to confirm their obligations to
protect the terms and conditions of transferring local government employees.
This will complement the Local Government Bill, which will require that
where public sector employees transfer, their terms and conditions will be
protected under TUPE unless there are exceptional circumstances.
Local government HR professionals welcomed the code, saying it would prevent
efficiencies being achieved through downgrading the terms and conditions of
However, employers involved in PPP/PFI have expressed concerns.
"Arguably, it restricts the private sector’s ability to deliver
services in the most efficient manner," said Emma Burrows, head of
employment at City law firm Trowers & Hamlins.
"This is not just because it increases staff costs, but because it
makes it harder to improve productivity by introducing incentives which might
be seen as being less favourable to public sector terms."