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Government scraps local government code protecting staff in outsourced contracts


The Government is to scrap local government’s ‘two tier code’, which protects terms and conditions of staff transferred to firms operating outsourced contracts.

Mark Hammerton, partner at lawyers Eversheds, said: "The confirmation of the withdrawal of the Code in Local Government comes as little surprise.

"The market has been treating the code as already condemned, since the codes applicable in other public sectors were announced in 2010 as being abolished. It is perhaps inevitable, as the pressure continues on public finances, that the focus in public sector tendering will increasingly be on financial value and service quality, rather than what some may regard as 'nice to haves', such as the code.

"Another potential example of this is the current HM Treasury consultation in relation to the 'fair deal' guidance, which governs pensions protection in public-to-private outsourcing. Critics of the code have argued that it was overly bureaucratic and restrictive on employers, made little sense in what are often multi-tiered workforces and was included in commercial contracts, to tick the box as it were, and then largely ignored.

"However, while the passing of the code will not be mourned by many commercial parties or their client councils, councils and their service providers should continue to have regard to (a) existing contractual obligations which require compliance, with the possibility of seeking agreed amendments and (b) existing procurement exercises which have obliged bidders to bid on the basis of the code being applicable. In this latter respect, potential procurement issues could arise if the goalposts are moved."