Public procurement


TUPE only protects the terms and conditions of transferring staff. It does not affect the terms and conditions of new employees who join the transferee after the transfer. 


One of the first acts of the Conservative-led coalition government was to abolish the “two-tier codes” for central government (the Code of Practice in workforce matters in public sector service contracts) and local government (the Code of practice on workforce matters in local authority service contracts) in England and Wales. 


These Codes aimed to prevent the privatisation of public services leading to the development of a two-tier workforce, by deterring employers from taking on new external recruits on less favourable terms.


The central government Code was replaced by a set of six “principles of good employment practice for government, contracting authorities and suppliers”. The third principle states: “Where a supplier employs new entrants that sit alongside former public sector workers, new entrants should have fair and reasonable pay, terms and conditions. Suppliers should consult with their recognised trade unions on the terms and conditions to be offered to new entrants.” The “principles” can be downloaded from the government website (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/62089/principles-good-employment.pdf). 


In Scotland, the Scottish Executive and the Scottish TUC agreed an “employment protocol” in 2002 for “public private partnerships” in Scotland, similar to the former Codes, which has not been withdrawn (www.gov.scot/resource/doc/1069/0005205.pdf).

In Wales, the Welsh Government introduced its own two-tier Code in June 2014, known as the Code of Practice on Workforce Matters. There are also model contract terms and conditions and a Procurement Advice Note, available from the website of the Welsh Government (http://gov.wales/topics/improvingservices/publications/two-tier-workforce-codes/?lang=en). 


Unions have long campaigned to ensure that service providers who are awarded public service contracts are required to offer decent terms and conditions that respect collective agreements, and are based on direct employment, regular and predictable hours and do not blacklist workers. 


An important new directive, the EU Public Procurement Directive (2014/14/24/EU), places new legal obligations on public commissioning bodies such as local authorities, when choosing new contractors. The Directive legally obliges all member states, by April 2016, to take “appropriate measures” to ensure that new service providers comply with EU environmental, social and labour law obligations, as well as national laws and collective agreements, when providing public services (Article 18(2)). 


The Scottish Government published a new procurement policy note for evaluating employment practices including workforce matters in public contracts, as well as statutory guidance confirming, for example, that bidders for public service contracts in Scotland that pay the living wage should be favoured over rival companies that do not. More recently, Scotland enacted new regulations, the Public Contracts (Scotland) Regulations 2015 (PC(S)R 2015), which become law from 18 April 2016 and which allow Scottish public sector bodies to refuse to award a services contract to the cheapest tenderer if that organisation falls below the the standards set by the Directive (including as to collective agreements). 


Also in Scotland, from 18 April 2016, public commissioning bodies are legally obliged by regulation 58(3) of the PC(S)R 2015 to exclude any business that is found by a tribunal to have breached the Blacklist Regulations 2010 or which has admitted doing so (see Chapter 5) (www.gov.scot/Topics/Government/Procurement/policy).


The position in England is different. Despite the mandatory language of the new EU Directive, new regulations, the Public Contracts Regulations 2015, in force in England since February 2015, do not impose the same legal obligations on commissioning bodies who want to engage private sector providers to provide public services in England.