Mayor of London, Ken Livingstone, today welcomed representatives of London Boroughs and trade unions to City Hall to discuss the promotion of fair employment in public sector procurement. Speaking at the seminar, he gave the example of two contractors providing catering and ancillary services to the redesigned Trafalgar Square who had agreed to a fair employment clause in their contracts with the Greater London Authority. This clause ensures that their staff receive terms and conditions no less favourable than if they were employed directly by the Authority.

Ken Livingstone said "I am pleased with the progress that has been made and particularly with the willingness so far of contractors to accept these contract clauses and their positive approach in outlining their fair employment provisions within their tenders."

The two contracts discussed by Mr Livingstone were:

Trafalgar Square - café and toilet cleaning contracts. The tender documents contained a notice of the GLA’s intention to assess the contractor’s attitude to fair employment obligations and to include a fair employment clause in the contract. The successful tenderers offered rates of pay that are well above the industry standard and an attractive package of benefits (by industry standards) including pension, holiday entitlement, sick leave and health screening.

City Hall - catering and cleaning contracts. These contract notices were issued before legal guidance was available so the GLA was unable to notify its intention to insert such a clause in the final contract. Therefore, the GLA had to rely on tenderers agreeing to us using fair employment provisions as a criterion, which they all did and in awarding the final contracts the successful tenderers for both services were assessed as good employers.

The GLA’s Legal Counsel, James Goudie QC, explained his opinion in detail and provided an update on various other legal issues relating to procurement, employment and equal opportunities.

In December 2002 The Audit Commission published its inspection report which reviewed the GLA’s policy and practice regarding the procurement of its goods and services. The inspectors noted that the GLA’s procurement practices actively promote supplier diversity, environmentally sound practice and fair employment.

Following the inception of the GLA, the Mayor wished to ensure a ‘Fair Employment’ policy applied to service contracts which the organisation awarded. The purpose of this policy was to ensure that the procurement or outsourcing of services did not drive down the terms and conditions of service for members of staff employed by contractors to work on GLA contracts. In addition, such members of staff should be employed under terms and conditions of service which, at the very least, kept in line with those of equivalent staff employed by the GLA.

In March 2003, the Office of the Deputy Prime Minister issued statutory guidance to combat the problem of the ‘2 tier workforce’. This is set out in the ‘Code of Practice on Workforce Matters in Local Authority Service Contracts.’ It re-affirms Cabinet Office guidance on public sector staff transfers which says that where staff are transferred, even if Transfer of Undertakings – Permanent Employees (‘TUPE’) does not apply in strict legal terms, staff should be treated as if it does apply and should therefore be treated no less favourably than they otherwise would have been.

It also seeks to ensure that new starters, who might otherwise have had to make do with inferior arrangements, are offered terms and conditions which are no less favourable than those of transferred employees. As such it is now clear that:

• when awarding contracts for services, best value authorities can, to an extent, take into account a contractor’s attitude to fair employment;
• when public sector staff transfer to private sector providers they must do so (except in exceptional circumstances) on the same or similar terms, whether or not TUPE applies;
• when new staff are employed alongside transferred staff they are to be offered terms that are no less favourable (with the exception of pension provision where the requirement is to make reasonable provision).

The news will be welcomed by large numbers of London's ethnic minority population who are employed in the public sector.

Click on link to download a copy of 'The Mayor's Procurement & Fair Employment Seminar ' report (, 202KB).