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Outsourced staff set to keep pay rises

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Council staff that are transferred to private firms are set to benefit from increased pay and conditions negotiated for local authority employees, following a landmark legal judgement.

A legal opinion issued by the advocate-general of the EU’s Court of Justice suggested private firms that took over the delivery of public services should increase the pay and conditions of staff they inherited from councils, if these increases were negotiated under the collective agreements that previously applied to those staff.

Emma Burrows, head of employment at Trowers & Hamlins, said the decision, which is likely to form the basis of a ruling by the EU Court of Justice, could deter private firms from taking over outsourced public services. This was because “they may be bound by the terms of collective agreements incorporated into transferring employees’ contracts, but will have no control over, or involvement in, the bargaining process”, she said.

The judgement comes in response to a legal challenge by the trade union Unison, which argued that 24 employees transferred from Lewisham LBC to the leisure management firm Parkwood Leisure were entitled to keep benefitting from increased pay and terms negotiated by the National Joint Council for Local Government Services after they stopped working for the council.

Bronwyn McKenna, assistant general secretary of the union, said: “We are delighted that fairness has won out in this important case. We knew that our members should have a right to the same pay and terms of employment which they signed up to when they took their jobs. 

“This ruling will be a huge relief for the many thousands of people who have been transferred out from their original employer, including those who have been, or are now at risk of being privatised.”

However, the judgement makes it clear that the government should be able to impose limits on employees’ rights to benefit from changes under the collective agreements.

In practice this could mean a one-year or two-year window in which staff would be entitled to the increases after being transferred from the public sector, employment lawyers at Trowers & Hamlins said.

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