Withdrawal of the "two-tier code" for local authority service contracts
The “Code of practice on workforce matters in local authority service contracts”, known as the two-tier code, has been revoked with effect from 23 March 2011.
The code applied when local authority services were outsourced, or retendered, resulting in a transfer of staff under TUPE. One effect of the code was that the terms and conditions of new employees hired to work alongside employees who had transferred over from the local authority had to be “no less favourable overall” than the terms and conditions of the ex-public-sector employees. The aim of the code was to avoid a “two-tier” workforce with transferred employees on better contractual terms than new recruits.
Guidance to local authorities on “Handling of workforce matters in contracting”, which covered procurement, equal opportunities and health and safety has also been withdrawn.
The withdrawal of the code will not be applied retrospectively. Employment terms under existing contracts will not be affected.
The Department for Communities and Local Government (DCLG) has said that it will write to employers, employer representatives and others to invite views on whether or not anything should replace the code, such as a statement of good employment principles.
The withdrawal of the “Code of practice on workforce matters in local authority service contracts” comes after the withdrawal of the “Code of practice on workforce matters in public sector service contracts” on 13 December 2010. This was a separate code covering central government contracts.
- Written statement on the withdrawal of the Code of practice on workforce matters in local authority service contracts The statement of the Secretary of State for Communities and Local Government announcing the withdrawal of the code is available on the DCLG website.
- ODPM Circular 03/2003 (PDF format, 196K) The Office of the Deputy Prime Minister circular that includes the code and the guidance on handling workforce matters in contracting, which have been withdrawn, is available on the DCLG website.
Also
Transfer of undertakings The HR & Compliance Centre employment law manual sets out employers' obligations when a transfer of staff occurs as a result of TUPE.
The 10 biggest TUPE pitfalls This article from Employers' Law gives guidance on how to avoid common pitfalls associated with TUPE transfers.
The HR & Compliance Centre FAQs section includes the answers to the following questions:
- Can the transferee change the contracts of the incoming employees upon the transfer of a business covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006?
- Would any collective bargaining agreements be carried over to the transferee upon the transfer of a business covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006?
- Where a transferee has no need for the employees transferred to it under TUPE, can the selection pool for redundancy include only the transferred employees, or must it also include the transferee's existing workforce?
