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Workforce Agenda

15 May 2005

Employment issues both generally and in the public sector featured strongly in New Labour’s policies and significantly impacted outsourcing companies. Norman Rose looks at the legacy of the 2-tier workforce, Agenda for Change and TUPE policies

THE ‘WARWICK’ AGENDA became a major focus for the Labour Government, trades unions and private sector service companies. The name comes from the Labour Party National Policy Forum meeting in July 2004 at Warwick University at which a number of policy issues were discussed and commitments (in principle) made in preparation for the General Election manifesto. The 2005 Labour Party manifesto contains the following statement – ‘The Labour Party has agreed a set of policies for the workplace (the Warwick Agreement) and we will deliver them in full.’

The commitments fall into four main categories - fairness at work, pensions, public services and manufacturing. The first three are of particular interest and have relevance to public sector contracting and outsourcing.

The most high profile issue was the promised extension of two-tier workforce protection, already in place in local government, across the rest of the public sector. The existence of a socalled ‘two tier’ workforce in the public sector has been high on the agenda of the trades unions and the Labour Party since 1997 and was highlighted in the 1997, 2001 and 2005 Election manifestos. This long-trailed commitment follows on from the local government agreement in 2003 resulting in the Code of Practice on workforce matters in local authority service contracts, as part of the Statutory Guidance on Best Value and Performance Improvement. In March this was extended to all public sector contracts which had not yet reached ITN in the bidding process on April 6, 2005.

New employees
The new code applies to all new employees in new contracts or re-lets of existing contracts, and provides that they will be paid at a rate broadly comparable to comparable employees doing the same job, and that they will be offered a choice of three pensions options (none of which they need to accept). As it stands, this should not cause companies any major difficulties in most cases, provided that there is a realistic acceptance that outsourcing costs will rise and that public sector clients will have to pay for this. Otherwise, the alternative will be to use less labour on the contract. The major benefit is that companies will in future be judged on the basis of the quality of service provision and the innovation and efficiency that they introduce into contracts rather than on the cost of (new) staff.

But there is one aspect that is frequently overlooked. These codes apply only to ex-public sector staff transferring to a private sector service provider (already covered by TUPE) and new staff brought in to fill vacancies. They fail to address the position of employees in second and subsequent generation contracts who have been taken on by a private sector service provider and have transferred with TUPE rights to the incoming contractor. They will not receive parity with those who have transferred from the public sector under these arrangements. Their terms and conditions will remain as they are unless action is taken by the trades unions to remedy their position. Such action has already been taken by Unison in a number of NHS contracts over the past year where strikes have been called to achieve this goal.

A number of the ‘Warwick commitments’ focus specifically on the Health Service. Central to these is the intention not to transfer out the vast majority of NHS employees. This is hardly a staggering statement since under Retention of Employment (RoE) around 90 per cent of service staff in current PFI contracts already remain NHS employees and it is unlikely that clinicians will ever become private sector employees contracted back into the NHS.

There is also a commitment to review all NHS cleaning contracts on a test of cleanliness and not just cost. This must apply to all contracts – inhouse and outsourced – if the test is to be a fair one. Indeed, in December 2004, the Department of Health produced a new standard cleaning specification for all hospital cleaning, subsequently revised. This should be favourable for private sector service providers since the service level agreements in their contracts require high levels of service delivery or else penalties will become operational. In the findings of the Department of Health’s MRSA surveillance system published in March 2005, directly provided services did not come out very well. This study found that overall there is no obvious correlation between incidences of MRSA and the way in which cleaning services are provided, but the listings revealed that eight of the 11 Trusts with the poorest ratings were cleaned by in-house teams.

A further commitment concerns steps to develop staff roles, such as for healthcare assistants to receive paid training and possible registration. Since the Department has already consulted on these proposals, which have been welcomed.

Working as one company has also resulted in changes to the way Johnson Controls faces its customers. A ‘global’ policy of account management has been adopted in place of a national approach that often saw key customers having to deal with different account managers from the FM, fire & security, and M&E service lines of business. Now key customers have one account manager to represent the company and to develop that relationship for the whole Johnson Controls offering. This approach is not limited to just the UK, but also for its pan-European and growing number of global customers.

The ability of the FM business to work effectively with global customers was recognised with the appointment in February of Guy Holden, formerly vice president of Johnson Control West Region Europe responsible for the UK, Ireland and South Africa as its first Vice President and General Manager of Global Facilities Management. He now has responsibility for the day-to-day operations of the FM business in the Americas, Europe and Asia Pacific regions, and achieving a doubling of its global FM business. Key growth areas are in the Far East such as Singapore and Malaysia, and in Australia.

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