George Osborne’s review of the Transfer of Undertakings regulations must not lead to a race to the bottom in terms of employee terms and conditions
One line in the Chancellor’s Autumn Statement that has attracted little attention is likely to be one of the most significant for the future of public services and, in particular, for the public service workforce.
George Osborne has announced a review of the Transfer of Undertakings (Tupe) regulations. It appears that in terms of the public sector at least (of course, Tupe applies to private sector transfer of undertakings as much as to public sector outsourcing), the government is intent on driving down costs at the expense of employees’ terms and conditions.
It remains to be seen how much the UK government can amend what is European Union legislation. But the very fact that the Chancellor is prepared to announce such a review in a statement that was otherwise understandably dominated by the macro-economic crisis tells us much.
There has been some discrete as well as some less subtle lobbying by a range of private and third sector organisations, arguing for deregulation in respect of public service outsourcing workforce issues.
The government has responded positively to this lobby, in that it has already withdrawn the Best Value ‘Two Tier’ code, which required new recruits to contracted services to be offered terms and conditions no less favourable overall than those for the staff who had transferred under Tupe. It has also signalled that it will rescind the ‘Fair Deal’ on pensions, which requires staff who transfer to private and third sector providers to be able to join employer pension schemes comparable to their public sector scheme.
But Tupe matters. It is valued by employees and by most responsible private sector public service companies (or at least it has been hitherto). For staff facing a transfer to a new employer on an involuntary basis, Tupe has offered some reassurance that their terms and conditions should be protected unless they choose to make any change.
For the companies, it has avoided a race towards ‘lowest-price contracting’ where that lowest price has been secured by cutting terms and conditions to the minimum, with the obvious consequences of lower staff morale and motivation, and lower quality outputs. Given that in most public services that are contracted to the private or third sectors, staff are the most important asset that transfers, contracting organisations want transferring staff to have some comfort that their terms and conditions will be secure.
Of course, there have been examples of employers failing to honour Tupe. Some contractors have forced staff either to leave their companies or accept worse terms and conditions (this often occurred under the former Compulsory Competitive Tendering (CCT) regime in relatively low-skilled workforces). And, unfortunately, some public bodies have failed to meet their statutory duty to ensure that organisations to whom they have contracted are meeting their Tupe obligations.
However, these problems are not reasons to diminish the power and reach of Tupe. There is substantial evidence of the correlation between quality service outcomes and the motivation and morale of staff. High staff turnover, which such a diminution of conditions could easily generate, is simply not good for services or service users, especially in areas such as health and social care.
Tupe was first applied to public sector outsourcing after joint pressure from the public sector trade unions and progressive private sector employers. It would be good to believe that such a ‘social partnership’ could be created to work with government and the wider public sector to review and improve – rather than diminish the current regulations and their application.
There are five core areas where some modification could be beneficial for all parties. However, the underlying starting point and premise has to be the principle that when any employee is transferred through the contracting or transfer of a service to another provider or owner, her/his terms and conditions are protected for the lifetime of that service contract, and any future contract.
The potential areas for review and worthy of serious consideration are:
- making it mandatory to involve staff and their trade unions in strategic commissioning and all stages of public service procurement (this is already recognised as best practice)
- enabling bidders to have access to staff and their trade unions prior to and during a public procurement process – and for staff and trade unions to have access to all the bidders (again this happens in well managed public procurements)
- making it mandatory for public sector procuring client bodies to ‘police’ contractual obligations in respect of workforce issues – including Tupe
- re-affirming and strengthening employee rights when a contract or contractor is sold onto another provider/owner and when contracts are re-tendered
- developing protocols for companies and unions on how to handle staff engagement and negotiations if changes to terms and conditions after Tupe transfers are sought to meet service and/or economic needs – whilst ensuring that any such changes must be subject to negotiation and not imposition
Such a review must recognise:
- the need for public service reform and that competition, plurality of supply and greater personalisation are positive developments
- the imperative not to stifle innovation or create barriers to new entrants to the markets
- that there will be considerably less public expenditure – that is a fact, but the rights and entitlements of staff, whoever employs them, must be honoured and respected
- that outsourcing should not be used to addressed long-needed human resources and industrial relations challenges that the public sector has failed to address
- that a well-rewarded and well motivate workforce that is properly engaged will deliver higher quality, change and productivity improvements – the key requirements for our public services
The government should not rush into further deregulation of workforce issues in public service outsourcing and partnership, including Tupe, if it wishes to fulfil its stated commitment to quality responsive public services.
