dsos ANGERED BY
DIRECT Service Organisations (DSOs) last week accused the Government of caving in to the demands of contract caterers after it withdrew a section on pensions from its guidance on transfer of undertakings (TUPE) regulations.
The section in question said comparable pension terms had to be offered to existing staff by a new contractor, but the Department of Environment (DoE) removed it at the last minute after a meeting with contractors.
The Association of Direct Labour Organisations (ADLO) said contract caterers were terrified because in many cases they would have to provide index-linked pensions when taking contracts over from DSOs.
"There isn't a private contractor in the country who would be prepared to offer that," said ADLO director John Roberts. "But competition would be seriously distorted if contract caterers did not have to maintain existing terms."
The Business Services Association (BSA), which represents some of the main contractors, said it had lobbied to have the section removed because it believed there was no requirement to provide comparable pensions.
Both groups agreed that TUPE itself stated only that the statutory pension need be provided when a contract is transferred. ADLO, however, said the Employment Protection (Consolidation) Act 1978 stipulated that new contractors had to provide transferring employees with pension terms equal to their existing ones.
The BSA's director-general, John Hall, said the association was looking at the Act to see whether the pension rule applied to local authority contract transfers.
"If we find that it does then the Government should amend it because of the effect it would have on compulsory competitive tendering," said Mr Hall.
A DoE spokesman said the section on pensions had been removed from the TUPE guidance to enable organisations such as the BSA to lobby the Employment Department on the rules.
The guidance, issued a fortnight ago, says councils can refuse contract caterers' bids if the two parties cannot agree whether TUPE applies. Mr Hall said this would work effectively only if the DoE carefully monitored councils' legal advice.
