Staff hired by private or voluntary organisations that win outsourced contracts from local government can be offered inferior terms to those who moved across from councils, the government has confirmed.
Communities secretary Eric Pickles yesterday endorsed plans to scrap the “two-tier code”, leading to fears of a race to the bottom on pay and conditions for staff working in outsourced services.
The two-tier code requires that, when councils outsource functions, private firms must employ new staff on the same terms as the public sector workers who transferred across.
In December last year, cabinet office minister Francis Maude announced his intention to end the two-tier code used in central government, but there has been some confusion as to whether this would extend to local authorities.
However, in a speech to the Confederation of British Industry yesterday, Pickles confirmed that it would.
Pickles said: “I can reveal today I am actively considering scrapping the so-called local authority two-tier code introduced by the office of the [former] deputy prime minister.
“It has increased the cost to the taxpayer of providing public services, and is actively discouraging the creation of new jobs by private firms.”
The plans could have a major impact on social workers as more councils outsource services to arm’s-length, private sector and voluntary sector organisations.
The announcement angered unions officials, who saw it as an attack on low paid staff.
Dave Prentis, general secretary of Unison, said: “By scrapping [the two-tier code], Eric Pickles is getting rid of vital protection for mainly low paid, women workers; particularly cleaners, home carers, and catering workers.
“Private firms taking over public contracts will now be free to start a race to the bottom on pay and terms and conditions, in these already low-wage occupations.”
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