By Claire West

The Government’s announcement that the Two-Tier Code* is to be scrapped will lead to more SMEs bidding for public sector work says EMW, the commercial law firm.

The Two-Tier code was introduced in 2003 and ensured that the pay and conditions of new staff hired by private companies who take over public-sector contracts would be comparable with those received by the former public sector staff they work alongside.

Jon Taylor, Head of Employment at EMW, the commercial law firm says: “The Two-Tier code was a major disincentive for smaller businesses to bid for Government contracts.”

“It restricted their ability to deliver services as cost-effectively as possible. This was not just because of increased staff costs but also because it made it harder for them to improve productivity.”

“For example, to introduce incentives such as performance related pay, as this may have been seen as being less favourable than public sector terms.”

EMW says that this new flexibility means that overall productivity can be increased and improved services can be delivered without an increase in price, and possibly cheaper. This would be a win-win situation for both the taxpayer and the end-user of the services being provided.

Comments Jon Taylor: “Traditionally, flexible working practices were seen as one of the efficiencies that smaller companies could bring to public sector work as they were not locked in deals with public sector unions.”

“Smaller companies and the voluntary sector in particular should welcome this change as without the restrictions of the two-tier code, they will be able to tender for business more confidently knowing that they can offer a competitive bid and will have greater control over how they deliver the service in future.”

*Code of Practice on Workforce Matters in Public Sector Service Contracts