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Code of Practice on workforce matters in public sector service contracts

The Code, introduced on 18 March 2005 with immediate effect, requires that where a service provider recruits new staff to work on a public sector service contract alongside staff transferred from a public authority, the service provider will offer employment on fair and reasonable terms and conditions which are, overall, no less favourable than those of transferred employees. The service provider will also offer reasonable pension arrangements. Thus the Code is designed to prevent the emergence of a two-tier workforce in such cases, ensuring that new recruits receive comparable treatment to transferred staff.

This Code forms part of the service specification and conditions for all such contracts (except those where the Best Value Code of Practice on Workforce Matters in Local Authority Service Contracts applies, or where other exemptions have been announced).

The Code recognises that there is no conflict between good employment practice, value for money and quality of service. On the contrary, quality and good value will not be provided by organisations who do not manage workforce issues well. The intention of the public sector organisation is therefore to select only those providers who offer staff a package of terms and conditions which will secure high quality service delivery throughout the life of the contract. These must be sufficient to recruit and motivate high quality staff to work on the contract and designed to prevent the emergence of a ‘two-tier workforce’, dividing transferees and new joiners working beside each other on the same contracts.

Nothing in this Code should discourage public sector organisations or service providers from addressing productivity issues by working with their workforces in a positive manner to achieve continuous improvement in the services they deliver. But its effect will be to discourage potential service providers from cutting costs by driving down the terms and conditions for staff, whether for transferees or for new joiners taken on to work beside them.

The Public Services Forum revisited the implementation of the Code in 2008.