No: 71       

13 February 2003

Contents:

·        A special message from the General Secretary

UNISON wins major breakthrough on the two-tier workforce

UNISON’s campaign to end the two-tier workforce received a major boost today when the Government announced new measures to be included in a Code of Practice covering local authorities in England. They will end pay discrimination against new starters on privatised and other outsourced contracts.  

The key aspects of the new measures, which were published today and will be issued as statutory guidance to councils to take effect in three weeks time, are as follows:

·         New starters to receive pay and conditions which are "no less favourable" overall than staff transferred from local authorities

·         Any reference to local labour market rates has been removed

·         For the first time, external service providers and contractors will have to make pension provisions for new starters which will be either:

·         admitted body status to the Local Government Pension Scheme

·         access to a contractor’s or stakeholder scheme with a matching employer contribution of at least 6%

·         An agreed dispute resolution mechanism between the trade unions, the local authority and contractor, to be triggered in the event of a complaint of non-compliance from the trade unions

The above measures will be a contractual requirement on contractors, who could be excluded from future shortlists in the event of breaching the guidance.

A copy of the Code of Practice is set out below together with a copy of a UNISON press release which has been released today.

Contact: Malcolm Wing on 020 7551 1322 or email [email protected]; or Heather Wakefield on 020 7551 1329 or email [email protected]

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CODE OF PRACTICE ON WORKFORCE MATTERS IN LOCAL AUTHORITY SERVICE CONTRACTS

Workforce matters under best value

1. This document sets out an approach to workforce matters in local authority service contracts which involve a transfer of staff from the local authority to the service provider, or in which staff originally transferred out from the local authority as a result of an outsourcing are TUPE transferred to a new provider under a retender of a contract. This Code will form part of the service specification and conditions for all such contracts.
2. 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 authority 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.
3. Contractors who intend to cut costs by driving down the terms and conditions for staff, whether for transferees or for new joiners taken on to work beside them, will not provide best value and will not be selected to provide services for the council. However, nothing in this Code should discourage local authorities or contractors from addressing productivity issues by working with their workforces in a positive manner to achieve continuous improvement in the services they deliver.

Treatment of transferees

4. In its contracting-out of services, the local authority will apply the principles set out in the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector and the annex to it, A Fair Deal for Staff Pensions. The service provider will be required to demonstrate its support for these principles and its willingness to work with the local authority fully to implement them.
5. The intention of the Statement is that staff will transfer and that TUPE should apply, and that in circumstances where TUPE does not apply in strict legal terms, the principles of TUPE should be followed and the staff involved should be treated no less favourably than had the Regulations applied. The Government has now indicated an intention to legislate to make statutory within local government the provisions in the Cabinet Office Statement.
6. The annex to the Statement requires the terms of a business transfer specifically to protect the pensions of transferees. Staff must have ongoing access to the Local Government Pension Scheme or be offered an alternative good quality occupational pension scheme, as defined in the annex to the Cabinet Office Statement, under which they can continue to earn pension benefits through their future service. There must also be arrangements for handling the accrued benefits which staff have already earned.

Treatment of new joiners to an outsourced workforce

7. Where the service provider recruits new staff to work on a local authority contract alongside staff transferred from the local authority, it 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 (as described at paragraph 10 below).
8. The principle underpinning the provisions of paragraph 7 is to consider employees’ terms and conditions (other than pensions arrangements which are dealt with in paragraph 10) in the round – as a ‘package’. This Code does not prevent service providers from offering new recruits a package of non-pension terms and conditions which differs from that of transferred staff, so long as the overall impact of the changes to this package meets the conditions in paragraph 7. The aim is to provide a flexible framework under which the provider can design a package best suited to the delivery of the service, but which will exclude changes which would undermine the integrated nature of the team or the quality of the workforce.
9. The service provider will consult representatives of a trade union where one is recognised, or other elected representatives of the employees where there is no recognised trade union, on the terms and conditions to be offered to such new recruits. The arrangements for consultation will involve a genuine dialogue. The precise nature of the arrangements for consultation is for agreement between the service provider and the recognised trade unions. The intention is that contractors and recognised trade unions should be able to agree on a particular package of terms and conditions, in keeping with the terms of this Code, to be offered to new joiners.

Pension arrangements for new joiners to an outsourced workforce

10. The service provider will be required to offer new recruits taken on to work on the contract beside transferees one of the following pension provision arrangements:

·         membership of the local government pension scheme, where the employer has admitted body status within the scheme and makes the requisite contributions.

·         membership of a good quality employer pension scheme, either being a contracted out, final-salary based defined benefit scheme, or a defined contribution scheme. For defined contribution schemes the employer must match employee contributions up to 6%, although either could pay more if they wished.

·         a stakeholder pension scheme, under which the employer will match employee contributions up to 6%, although either could pay more if they wished.

On a retender of a contract to which this Code applies the new service provider will be required to offer one of these pensions options to any staff who transfer to it and who had prior to the transfer a right under the Code to one of these pension options.

Monitoring arrangements

11. Throughout the length of the contract, the service provider will provide the local authority with information as requested which is necessary to allow the local authority to monitor compliance with the conditions set out in this Code. This information will include the terms and conditions for transferred staff and the terms and conditions for employees recruited to work on the contract after the transfer.
12. Such requests for information will be restricted to that required for the purpose of monitoring compliance, will be designed to place the minimum burden on the service provider commensurate with this, and will respect commercial confidentiality. The service provider and the local authority will also support a central Government-sponsored review and monitoring programme on the impact of the Code, drawn up in consultation with representatives of local government, contractors, trade unions and the Audit Commission as described in paragraph 17, and will provide information as requested for this purpose. Such requests will follow the same principles of proportionality and confidentiality.

Enforcement

13. The local authority will enforce the obligations on the service provider created under this Code. Employees and recognised trade unions should in the first instance seek to resolve any complaints they have about how the obligations under this Code are being met, directly with the contractor. Where it appears to the local authority that the service provider is not meeting its obligations, or where an employee of the contractor or a recognised trade union writes to the authority to say that it has been unable to resolve a complaint directly with the contractor, the local authority will first seek an explanation from the service provider. If the contractor’s response satisfies the local authority that the Code is being followed, the local authority will inform any complainant of this. If the response does not satisfy the local authority, it will ask the service provider to take immediate action to remedy this. If, following such a request, the service provider still appears to the local authority not to be complying with the Code, the local authority will seek to enforce the terms of the contract, which will incorporate this Code. In addition, where a service provider has not complied with this Code, the local authority will not be bound to consider that provider for future work.
14. The contract shall include a provision for resolving disputes about the application of this Code in a fast, efficient and cost-effective way as an alternative to litigation, and which is designed to achieve a resolution to which all the parties are committed. The contractor, local authority and recognised trade unions or other staff representatives, shall all have access to this ‘alternative dispute resolution’ (ADR) process. The Government has asked local authorities, trade unions and contractors to come forward with an ADR mechanism which is consistent with this Code, for inclusion in contracts. In the event that within a specified timescale the parties are unable to agree, the government will publish as an annex to this Code its proposed ADR mechanism.
15. Local authorities will have a duty in their performance plans to certify that individual contracts comply with best value requirements, including workforce requirements in this Code and the accompanying statutory guidance. The Audit Commission's appointed auditor will through the audit of the Performance Plan:

·         provide assurance that councils are meeting their statutory duty of certifying their compliance with the Code and that they have put in place adequate arrangements to ensure compliance;

·         receive information from third parties about any concerns with the council's compliance;

·         consider the information received and decide how to deal with those concerns;

·         where the subject of any concern is of material significance (e.g. large contracts or a major breach of this Code is alleged) the auditor will decide on a proportionate response to investigate the concerns.

16. If as a result of investigations the auditor has concerns about an authority’s compliance with this Code, they may exercise their appropriate statutory powers, which include:

·         requiring the authority to respond publicly to a written recommendation;

·         recommending that the Secretary of State should give a direction under Section 15 of the Local Government Act 1999.

The Audit Commission will issue guidance to councils and auditors on how these matters will be dealt with.

Sub-contractors

17. This Code sets out procedures for handling matters between the local authority and a primary contractor. Where the primary contractor to provide services to the local authority transfers staff originally in the employ of the local authority to a sub-contractor in consequence of the terms of the primary contractor’s obligations to the local authority, the primary contractor will be responsible for the observance of this Code by the sub-contractor.

Operation of this Code

18. The Government will monitor the operation of this Code and consult with representatives of local government, trade unions, contractors and the Audit Commission to assist in this process.

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FOR IMMEDIATE RELEASE: 13 FEBRUARY 2003

UNISON WINS FIGHT TO PROTECT LOCAL GOVERNMENT WORKERS

UNISON, the UK’s largest union, is today celebrating a significant victory in its long-running campaign to end the two-tier workforce in local government, with a breakthrough deal endorsed by the Prime Minister and the Deputy Prime Minister.

UNISON has been involved in intense negotiations over the pay and conditions new staff receive when contracts are handed over to private companies to provide local authority services. At present existing staff who transfer to private companies have their pay, conditions and pensions protected, but new starters are often paid substantially less.

The government has agreed a code of practice covering contracts between local authorities and private companies which means new staff will get pay and conditions that are overall "no less favourable" than transferred staff. UNISON had rejected an earlier proposal for "broadly comparable" pay and conditions as too ambiguous and open to abuse.

Crucially, the union has achieved its major objective of making the code enforceable rather than voluntary, which the private companies had been insisting on.

The code’s provisions will be written into new contracts and, in future, staff who feel they have been unfairly treated will be able to seek redress.

For the first time, private companies will have to provide pensions for new starters. UNISON has long expressed concerns that new starters are either not given access to a pension scheme or end up in money purchase schemes, which are less favourable than the local government pension scheme – a final salary scheme.

UNISON General Secretary Dave Prentis said:

"The bottom line is that the government and the Prime Minister gave a commitment to end the two-tier workforce – and after 18 months of intense discussions and negotiations, I am pleased that UNISON has brokered this ground-breaking deal."

For 18 months, UNISON’s priority has been to hold the government to its commitment and to stop two people employed by the same company doing the same job being paid different rates of pay.

Dave Prentis added:

"Our hard work and persistence has paid off. We have worked closely with the Labour Party, ministers and officials, including at Number 10, both on our own and with the other unions to achieve our objectives."

UNISON also proposed and drafted amendments to the Local Government Bill, currently going through parliament, to strengthen the code and end the two-tier workforce.

Dave Prentis:

"When this code comes into force, private companies will be prevented from winning contracts by cutting the pay and conditions of staff, and will have to compete on a level playing field for the first time. I am confident that when it comes to competing on quality, the public sector will beat private sector companies hands down and more contracts will return in-house."

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