Working with a number of social enterprises effectively delivering puplic services in Argyll.  Opportunity to increase this work, however an issue that is coming up in our work (and work elsewhere across the country) is in relation to the impact of service transfer to front line staff terms and conditions. I think this is an area of learning that needs further exploration, can anyone provide examples of practice where terms and conditions of staff have been retained (I beleive the transfer of Primary Care Trusts down south had retained terms and conditions -including pensions for staff) as well as examples where front line staff have been negatively affected by lowering costs at the expense of terms and conditions.  I know of a few examples in the care sector where staff pay and conditions have been reduced to tender at a lower price for service delivery. 

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I believe this is a fundamental issue which has the potential to exacerbate and negatively impact the many UK employees who have, or will, experience the transference of services between private, public and third sectors. For many years, social theory academics and research think tanks have forewarned, and then identified the creation of a two-tier workforce. It is quite incredible that this issue has not been at the forefront of discussion and research. As far back as 2002 the ‘Third Sector’ online publication reported UNISON’s concerns regarding the  establishment of a two-tier workforce following the largest ever transference of youth services from the public sector to the voluntary sector.

It is quite clear that UNISON’s concerns have been realised in recent years, only to be further exacerbated by the relatively recent abolishment of regulations which required that organizations, taking over public service delivery from councils, gave new staff employment conditions equivalent to those who had previously transferred from a local authority.

These regulations were put in place to prevent charities and other organisations which deliver public services from hiring new staff whose working conditions, including pay, working hours and pensions, were inequitable to those of their colleagues who had previously worked for a council. Although government officials state that this change does not affect TUPE regulations, it is extremely difficult to accept that a two-tier third-sector workforce does not exist, and that the overall terms and conditions of third sector employees will not decline.

Although, of course, ABSEN promote and support the third sector delivery of services, nevertheless we are concerned about the sensitive, complex nature of service transferal. ABSEN have noted the Scottish Council for Voluntary Organisations observations of private contractors which have tried to undermine the TUPE regulations- for example;

  • Five staff members in Inverness who were transferred to a Working Links subcontractor, Argyll and Bute Council, were told that they would have to take pay cuts if they wished to remain in work, including one of £6,600 a year.
  • Five staff in Moray, who were transferred to Lifeskills, this time acting as a Working Links contractor, were invited to what they thought was a briefing and told instead they would be interviewed for two jobs, despite not having a description of what those jobs involved.

Although my personal experience of the third-sector workforce in the Argyll and Bute area is overwhelmingly positive, nevertheless,I agree wholly with the sentiments of Ailsa- this area must be thoroughly researched in order to safeguard the terms and conditions, an thus the attractiveness, of third sector employment.

Hi Ailsa,


Over the last few days I’ve been chatting to people about this, and also looking at some of the literature/press coverage on the two-tier workforce issue.  You requested examples of good practice, where terms and conditions of staff have been retained, and I’ve provided what I think is the best source of this below.


What is most interesting is that the literature on service transfer seems to skirt over this issue.  If you look at JRF’s authoritative work on service transfer entitled The voluntary sector delivering public services: Transfer or transf... they say little about this.  The closest they get is in revealing that public sector staff, due to be transferred to a third sector organisation, were ‘anxious’ about changes to terms and conditions.  It suggests that by ‘ensuring that staff were not disadvantaged financially through the process of transfer and that basic systems were in place for payroll, pensions etc’ then such anxieties were removed. 


This issue has only really come to such prominence because the current UK government has scrapped the two-tier code (as Justine notes above).  So what has changed?  The old two tier code stated:


‘The service provider will offer employment on fair and reasonable terms and conditions which are, overall, no less favourable than those of transferred employees. The service provider will also offer reasonable pension arrangements. Thus the Code is designed to prevent the emergence of a two-tier workforce in such cases, ensuring that new recruits receive comparable treatment to transferred staff


Replacing this is the somewhat more ‘malleable’ principle of:


‘A commitment to fair and reasonable terms and conditions:

i. 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.’


So if the development of a two-tier workforce seems ever more likely (and we choose to oppose this) then what can we do?  This recently published document is the most useful source of guidance/good practice that I’ve found (


To summarise, it seems the most effective way to deal with the development of a two-tier workforce is to;


- Correctly cost and price contracts

- Have effective pay/salary frameworks that link the pay and value of certain jobs (e.g. Agenda for Change)

- Pay ‘market rates’ rather than ‘lowest rates’ to staff

- Have enforcement mechanisms that ensure contractual arrangements to prevent two-tier workforces are carried out

- Fully communicate and engage with employees and their representatives/unions

- Facilitate communications between existing and transferred staff


I appreciate this research is sponsored by UNISON, and therefore has this bias, but nonetheless I think it’s a useful document that’s grounded in practical examples.


This all leaves me with one big (controversial) question…does a commitment to retaining the terms and conditions of staff make service transfer largely unviable? 

I think if services are effectively procured based on quality and price then fair terms and conditions can be protected.  The trouble arises when the focus is on saving costs and opting for the cheapest price wins approach.  Evidence from across the country demonstrates that this impacts negatively on the service.  As part of that negative impact, in order to compete, third sector providers have had to make savings by cutting staff terms and conditions.

However if services are procured effectively, third sector providers can produce savings and quality services as well as adding value to services through engaging with service users and the wider community.  Mamimising community benefits from public service procurement offers scope to ensure that public money goes further and adds value. 


It would be good to compare and contrast some of the examples of terms and conditions in the third sector delivery of public sector services from across the country.  Feeback and examples most welcome :0)

Evidently, the government abolished the code in order to exacerbate the realisation of its Big Society. I believe this to be an ill-considered policy decision, with potentially catastrophic effects – by failing to safeguard fair terms and conditions, the sector may fail to attract the required talent needed to successfully deliver services, and their ‘Big Society’ rhetoric could receive fatal critique to the detriment of third sector organisations.

However, when approaching this issue, we must regard relativity - terms and conditions are being stripped back across all sectors. Although to varying degrees of essentiality, graduates can now expect to enter employment for as little as £12,000, while employees in the private and public sectors are also experiencing pay cuts, pay freezes and the reduction/withdrawal of perks and benefits which may have been a primary draw to a job or organisation.

The Conservative government endorses a relatively ‘hands off’ approach to business, therefore it is extremely difficult to envisage how to indoctrinate the terms and conditions of private, public and third sector employees. However alliances such as the Leeds Initiative and Argyll and Bute Local Services Initiative (ABLSI) offer the capacity to unite public and third sectors (and,to a lesser extent, the private sector) to negotiate and agree upon applicable frameworks.

Furthermore, from past experience, the third sector often relies on the services of volunteers, whilst board members also offer their time and efforts free of charge. Therefore, there is often an organisational expectation that employees should ‘go above and beyond’ their contractual duties, or be willing to accept a salary below market rate, for the benefit of particular social or environmental objectives.

I will reiterate that I am relatively new to the third sector so apologies if I am off the mark or naïve …has anyone identified this as an area of sensitivity in regards to the commitments of individuals as community members and as local third sector employees?    


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