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Prime Minister announces roll-out of code to tackle two-tier workforce across the public sector

The Prime Minister today announced a major extension of the ‘Code of Practice on Workforce Matters’. This currently operates in local government but it will be extended to the wider public sector - including the Civil Service, NHS and maintained schools - with immediate effect.

The Code prevents the emergence of a two-tier workforce in cases where public sector employees are contracted out to a service provider, ensuring that new recruits receive comparable treatment to the transferred staff.

The extension fulfils the Prime Minister’s commitment given last autumn and forms part of the Government’s wider commitment to fairness in the workplace. It will apply where a public sector organisation transfers employees to a private or voluntary sector partner as part of a service contract. There will be a limited number of exemptions. (See notes to editors.)

Under the code, new joiners will be offered terms and conditions that are, overall, no less favourable than those of transferred employees. This does not mean that the terms have to be the same. Flexibility is important, but this must not result in an outcome overall that is less favourable.

The code also makes sure that new joiners will be offered a reasonable pension, through membership of a good quality employer pension scheme or membership of a stakeholder pension scheme with an employer contribution.

Welcoming the announcement, David Miliband, Minister for the Cabinet Office, said:

‘Fairness at work is part and parcel of the move to achieve a more flexible and adaptable workforce to deliver the best possible public services to local communities. I am therefore delighted with this extension of the ‘Two-Tier Code’ across the public sector, following consultation with the TUC and CBI.

‘By building on the successful introduction of the code in local government, we are ensuring that all new entrants taken on by contractors in new or retendered service contracts will benefit from terms and conditions that are no less favourable than those of transferred public sector employees. They will also be offered a reasonable pension.

‘The Prime Minister’s announcement will support the Government’s drive to increase productivity, as public sector organisations, contractors and unions seek to identify ways of increasing value for money. Indeed, by addressing a genuine grievance, I hope we will see a step-change in workforce innovation and flexibility as part of our shared commitment to provide better public services.’

Notes to editors

1. The Code of Practice on Workforce Matters (‘Two-Tier Code’) will apply from the date of the announcement to new and retendered contracts, including projects in procurement up to the ‘invitation to negotiate’ (ITN) stage. It will not apply retrospectively to contracts that have already been entered into or procurements that have progressed to the ITN stage.
2. Some limited exemptions will be applied, including public corporations and trading funds, Independent Sector Treatment Centres, NHS PFI contracts covered by the Retention of Employment model, Higher and Further education. and Academies. The HE and FE employers and unions have nonetheless been encouraged to discuss the application of the code, consistent with the aim of tackling the two tier workforce.
3. The full Code of Practice on Workforce Matters is available at http://www.cabinetoffice.gov.uk/opsr/workforce_reform/code_of_practice/index.asp http://archive.cabinetoffice.gov.uk/opsr/workforce_reform/code_of_practice/index.asp [Edit revision – Link changed 26/04/2006] [Archive content].
4. The detailed implementation of the code in each sector will be discussed by departments, public service organisations and unions.

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