Withdrawal of the "two-tier code" for public sector contracts
The "Code of practice on workforce matters in public sector service contracts" (known as the two-tier code) was withdrawn from 13 December 2010.
The code applied when public sector 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 public sector 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.
The code is replaced by new “Principles of good employment practice”. The principles have a voluntary status and the Cabinet Office has stated that “contracts will still be awarded on the basis of value for money and not on the basis of who signs up to the principles”. The impact of the principles on employment practice will be reviewed by the Public Services Forum in January 2012.
The "Code of practice on workforce matters in local authority service contracts" remains in place. This is a separate code to the central government code that has been withdrawn. The Department for Communities and Local Government has indicated that the local authority code may also be withdrawn, but local authorities should continue to apply it until such a decision is announced.
- Statement on principles of good employment practice (Microsoft Word format, 284K) The Cabinet Office has set out six principles for private sector contractors to apply when public sector employees transfer to their workforce (on the Cabinet Office website).
- Statement on withdrawal of two-tier code (Microsoft Word format, 293K) An information note for suppliers can be downloaded from the Cabinet Office 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?