SECTION 1: INTRODUCTION

1.1  This Guidance has been developed by Local Partnerships (formerly, the Public Private Partnerships Programme ("4ps")) in conjunction with Pinsent Masons Solicitors. It is designed to assist Local Authorities comply with their legal obligations concerning Local Authority staff when transferring any employees to another public, private or voluntary sector provider as part of a contract to provide services to the Authority, and indeed when transferring any employees and services back in-house, following an initial transfer.

1.2  Local Authorities are required by their duty of best value to make arrangements to secure continuous improvement in the way in which they exercise their functions, having regard to a combination of economy, efficiency and effectiveness1.  One of the options considered by Authorities to deliver such continuing improvement is through the externalisation or outsourcing of certain functions to third parties through contracts under initiatives such as the Private Finance Initiative ("PFI"), the NHS Local Improvement Finance Trust Initiative ("LIFT") and other forms of public/private partnerships. Use of external service providers has gathered pace over the last 10 years and the recent drive to increase public sector efficiency following the implementation of the Gershon Review2 is only likely to spur greater activity in this area. As acknowledged by the DCLG, there is a strong correlation between delivering high quality public services and good employment practices.

1.3  Consequently, the DCLG introduced a package of measures designed to ensure better protection of the terms and conditions of transferred staff as well as fairness for new workers taken on to work on Local Authority service contracts alongside a workforce transferred from the Local Authority through the following:-

1.3.1  Circular 03/2003 (Local Government Act 1999: Part 1 Best Value and Performance Improvement) ("Circular") and Annex D of this Circular which contains the Code of Practice on Workforce Matters in Local Authority Service Contracts ("Code of Practice"); or

1.3.2  Sections 101 and 102 of the Local Government Act 2003 ("LGA 2003").

On 23 March 2011 DCLG withdrew the Code of Practice with a view to removing obstacles for contractors tendering for outsourced Local Authority service contracts. The withdrawal is not retrospective and the Code of Practice will continue to apply to existing contracts where it already applied. At the time of withdrawing the Code of Practice DCLG notified of its intention to consult on which alternative provisions should be introduced. DCLG have therefore written to interested parties to obtain their views on an alternative such as the Principles of Good Employment Practice as in the case of Central Government for outsourced contracts.

Notwithstanding the withdrawal of the Code of Practice, the relevant guidance and drafting has not been removed from this document. Many Contracts that were in existence at the time of the withdrawal will incorporate the Code of Practice drafting which will not be considered for removal until the expiry or the re-tendering of that Contract. In addition, some Authorities may wish to voluntarily incorporate the Code of Practice into contracts. On this basis the guidance and Code drafting has been left in this document for reference. However, to assist users, all Code related items have been italicised.

1.4  The measures listed in paragraph 1.3 above build upon the existing legal framework governing the transfer of employees as contained in the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") which implements the EC Acquired Rights Directive in the UK.

1.5  To assist Authorities in dealing with the often sensitive workforce issues which arise during any proposed transfer, this Guidance contains standard drafting and an explanation of the various contractual provisions which should be inserted into contracts to ensure employees' terms and conditions are protected following contract award and during the contract term. This Guidance builds upon Local Partnerships/IDEA/EO (now LGE) Standard Clauses and Guidance dealing with the Code of Practice on Workforce Matters in Local Authority Service Contracts (first published in 2004 but now superseded by this guidance and model drafting). This latest draft takes in changes to the law as a result of the 2006 TUPE regulations and seeks to provide Local Authorities with a comprehensive guide to the provisions they should incorporate when transferring employees as part of a contract to provide services to a third party.

1.6  In this Guidance, the following are addressed:-

1.6.1  the application of TUPE and the Code of Practice;

1.6.2  pension arrangements; and

1.6.3  other general employee provisions (including Criminal Record Bureau checks, access to sites and policies and procedures) which should be included in all Local Authority service contracts including the transfer of employees.

1.7  The standard drafting set out in this Guidance has been developed by Local Partnerships in consultation with the Local Government Employers, the Improvement and Development Agency, Communities and Local Government and Pinsent Masons Solicitors and has been included in sector specific project agreements approved by Partnerships UK as contained in Local Partnerships' procurement packs. For further details please contact Local Partnerships or visit the Local Partnerships website at www.localpartnerships.org.uk

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1  Section 3 of the Local Government Act 1999.

2  Releasing Resources for the Frontline: Independent Review of Public Sector Efficiency (July 2004)