An announcement by Mr Pickles appeared to scrap the crucial “two-tier” code which protects workers’ pay, conditions, sick pay and pensions if they are transferred from a local authority to a private contractor. But the small print suggests that by not scrapping other agreements – such as arrangements on pensions – it is not clear what he has done. He seems only to have made it worse for new recruits.
As a result unions, councils, private firms and charities are now totally confused. Contractors are not sure how to tender for work, councils don’t know what to accept and unions are watching carefully to see how this turns out. And everyone is wary of each other.
Brian Strutton, national secretary of the GMB, said: “If this is pursued, it will move the situation from a political dispute about transferring jobs from local government to a row over pay and conditions which will make it a much bigger issue. While people may object to being no longer employed directly by councils, they are going to feel much more sore if they lose pay, sick pay, pensions and working conditions by being transferred to a private contractor.”
Some of the big contractors, such as Veolia and Biffa, prefer to take on people who remain in a public sector pension scheme rather than devise their own – and many firms do not want to employ a disgruntled and hostile workforce.
Lawyers are also taking a cautious approach. Even supporters of a free-for-all, like Eversheds, are warning clients of potential pitfalls if they rush headlong into cutting pay and conditions.
Mark Hammerton, a partner at the firm, said: “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 existing contractual obligations which require compliance, with the possibility of seeking agreed amendments, and existing procurement exercises which have obliged bidders to bid on the basis of the code being applicable.”
