Statement of Practice

2.9  The Statement of Practice, issued in January 2000, laid down a framework governing all public sector outsourcings which should be conducted in accordance with the following principles:-

2.9.1  contracting-out exercises with the private sector and voluntary organisations and transfers between different parts of the public sector, should be conducted on the basis that staff will transfer and TUPE will apply, unless there are genuinely exceptional reasons for TUPE not to apply;

2.9.2  TUPE will apply to second and subsequent contracts that result in a new contractor and where a function is brought back into a public sector organisation where, in both cases, when the Contract was first awarded staff transferred from the public sector;

2.9.3  in circumstances where TUPE does not apply in strict legal terms to certain types of transfer between different parts of the public sector, the principles of TUPE should be followed and the affected staff should be treated no less favourably than if TUPE had applied; and

2.9.4  there should be appropriate arrangements to protect occupational pensions of staff in all these types of transfer.

2.10  The Statement of Practice is not directly applicable to local government. However, the Code of Practice specifically states that Local Authorities will apply the principles set out in the Statement of Practice and, since 1 October 2007, parts of the Statement of Practice have been given statutory footing. The Best Value Authorities Staff Transfers (Pensions) Direction 2007 issued under section 101 of the LGA 2003 (the "Direction") brought into operation section 102 of the LGA 2003 confirming the requirements for the protection of the occupational pensions of the transferring staff. The Direction applies to best value authorities in England (and the police authorities in Wales).The operation of the Direction is clarified by LGPC Bulletin 68 as follows:-

(a)  for contracts first let on or after 1 October 2007 by best value authorities in England and police authorities in Wales, the transferring staff who are in (or eligible to be in) the LGPS at the point of transfer must be offered the LGPS or a broadly comparable scheme, and this protection carries on at each subsequent TUPE transfer (subject to the member of staff remaining eligible for membership of the LGPS); and

(b)  for contracts first let before 1 October 2007 by best value authorities in England and police authorities in Wales, where the contract is re-let on or after 1 October 2007 the original transferring staff (i.e. those who were transferred from the local authority when the contract was first let) must be offered membership of a scheme that is broadly comparable to the scheme they were in prior to the re-let. This means that if the staff were in a scheme (of lesser value than the LGPS, all the new contractor has to do is provide a scheme for the original transferring staff which is broadly equivalent to the scheme that the outgoing contractor had offered them.

It is possible that the Direction does not apply to contracts for services entered into by maintained schools because such bodies would not fall within the definition of a best value authority (as defined in the Local Government Act 1999) to which the Direction applies. However, the view of the former Department of the Environment, Transport and the Regions (now Communities and Local Government) was that the reference to best value authorities in regulation 5(17)(j)(i) of the Local Government Pension Scheme Regulations 1997 was sufficiently defined to include maintained schools within its ambit. The Local Government Pensions Committee (LGPC) also obtained legal advice to the same effect. Paragraph 3(3)(c) of Schedule 1 to the Education Act 2002 gives the power to the governing body to enter into contracts. However, subject to certain exclusions in respect of voluntary aided schools, Section 49 (5) (b) of the School Standards and Framework Act 1998 makes it clear that a delegated budget spent by the Governing Body or by the Head Teacher shall be taken to be spent by them or him as the Authority's agent. To put it beyond doubt that the Direction should apply to such contracts, it would be helpful if a statutory instrument was issued in much the same way that the School Governance (Contracts) (England) Regulations 2005 (No 1508) ensured that maintained schools had regard to the Code of Practice on Workforce Matters in Public Sector Service Contracts when entering into contracts for the supply of services. A maintained school is a community school, a community special school, a foundation school, a foundation special school, a maintained nursery school, a voluntary school or a trust school.