21st December, 2010
All the latest stories from the world of work
The government announced it will scrap the two-tier code this month, with immediate effect. The Code was introduced in 2003 to ensure that new employees in outsourced public services had terms and conditions that were comparable to those who had transferred to the service under TUPE agreements.
According to the Cabinet Office, removing the two-tier code will reduce costs and open up procurement allowing more SMEs, social enterprises and third sector organisations to compete to deliver government contracts.
The Code will be replaced by the Principles of Good Employment Practice, a voluntary set of guidance to encourage best practice.
Unions have criticised the move, arguing that it will encourage a race to the bottom in public sector pay and service quality. UNISON general secretary, Dave Prentis, said, “This is another attack on mainly low paid women workers. The two-tier code is essential to stop companies that are in the process of bidding for public -sector contracts competing on how low they can pay their staff.”
Will Hutton called for a maximum pay ratio to be introduced in the public sector to halt the rapid rise in executive salaries. Hutton, who is leading the government’s review on fair pay in the public sector, has suggested that executives should be paid no more than 20 times the salary of the lowest paid in the organisation.
Hutton warned that there had been an ‘arms race’ in private sector pay that could easily be reproduced in the public sector. The Fair Pay Review was established earlier this year after public outcry at the earnings of leaders and senior managers in the public sector.
Around 20,000 public workers currently earn over £117,523 per annum putting them in the top 1 per cent of earners. Approximately 4,000 of these are managers and the rest are NHS medical professionals.
Hutton said: "There is a strong case for public sector organisations having to comply with, or explain why they do not comply with, a maximum pay multiple, such as 20:1. This would demonstrate fairness by reassuring public opinion, address a problem of collective action across remuneration committees, and benefit organisations' productivity."
Hutton also recommended greater disclosure on pay, widening the recruitment pool for executives and better use of performance pay.
The Fair Pay Review will make detailed recommendations in its final report due to be published in March 2011.
The government has announced that the 2010 Equality Act will no longer make gender pay audits mandatory.
The Act had contained a clause which made it possible for the government to require medium and large organisations to conduct gender pay audits and report on the size of the pay gap after 2013.
However, this provision has now been abandoned and government will instead encourage employers to publish their gender pay gap on a voluntary basis.
Equalities minister, Lynnne Featherstone, argued that businesses required a more flexible approach to solving the complex causes of workplace inequality. Employers will still be able, however, to appoint candidates from under represented groups if all candidates are equally qualified for the role in order to create a more diverse workforce.
The change was welcomed by the CBI, but received criticism from trade unions, who accused the government of watering down the legislation.
