Ministers are reviewing pay and pension protection for the employees of outsourced local services.
The Department for Communities & Local Government announced the review after the Cabinet Office scrapped a similar code covering services outsourced by other parts of the public sector.
Cabinet Office minister Francis Maude said the ‘two-tier code’ would be scrapped immediately as it did “little to protect staff”. It will be replaced with a voluntary ‘Principles of Good Employment Practice’ which would “give employers freedom”.
A spokesman for DCLG later stated: “We will now consider the implications for the future of the two tier code for local government (the Code of Practice on Workforce Matters in Local Authority Service Contracts) and will consult with local government employers and the trade unions as necessary.”
Union leaders such as Unison general secretary Dave Prentis have decried the decision to review the codes as the beginning of a “race to the bottom”.
He said: “This is another attack on mainly low-paid women workers. The two-tier code is essential to stop companies that are in the process of bidding for public sector contracts competing on how low they can pay their staff.
“Even many companies that bid for these contracts are privately worried this will result in a race to the bottom in pay and conditions.”
However, the government’s decision is backed by the Local Government Association who said the code’s “powers and duties are uncertain and add a significant layer of bureaucracy and additional cost to local authorities in managing contracts and additional costs to suppliers in taking on public sector contracts”.
An LGA briefing document said much of the code is replicated in the TUPE Regulations 2006 and Pensions Act 2004, and complained there was a lack of information on how the code is being implemented.
The code was an example of government initiatives creating “a tension between cost-cutting measures in the provision of services and protecting terms and conditions of employment”, it added.