research-report-96-coming-clean-contractual-and-procurement-practices.doc

Also in a study of outsourcing by local authorities

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Also, in a study of outsourcing by local authorities, procurement managers used strategies of ‘fragmentation’ to reduce the ability of transferring workers to claim they were associated with an outsourced service; subcontracted services were either broken up into smaller geographical entities or outsourced in small bundles incrementally over time to avoid TUPE rules (Grimshaw et al., 2012). A second institutional effect concerns the encompassing scope of collective agreements. European comparisons show that employer strategies to fragment business activities have less deleterious effects in sectors and countries where there is generally high bargaining coverage in all sectors and/or coordination between collective agreements. In countries with decentralised bargaining and weak union representation, such as the UK, fragmentation is associated with wider variation in employment conditions and a greater risk that outsourcing will downgrade subcontracted workers’ conditions over time (Appelbaum and Schmitt, 2009; Doellgast, 2012). There are three possible scenarios: i) where suppliers are covered by the same multi-employer collective agreement as the client organisation, employment conditions are to some extent standardised (typical in Sweden for example); ii) where suppliers are covered by a separate collective agreement to the client but there is a gap between agreements in the quality of conditions and strength of collective representation (Pulignano and Doerflinger, 2013) - thereby also raising the risk, that the client organisation is using outsourcing to bypass their own more generous collective agreement conditions (Doellgast and Greer, 2007); iii) and where suppliers are not covered by a collective agreement but the client is, thereby generating a high risk of a deterioration in employment conditions, as well as a clear incentive for the client organisation to favour outsourcing as a means to reduce costs. 4 Unions in the UK enjoy a very limited ability to make a collective agreement more encompassing, namely to extend from a client organisation to a subcontractor workforce. The only current example is use of the Two Tier Code in collective agreements. Introduced as a voluntary Code by the New Labour government in the mid-2000s, the Two Tier Code encouraged unions, subcontractors and public sector client organisations to negotiate the extension of public sector terms and conditions to all workers employed by the private (or independent) sector subcontractor at that particular workplace. Abolished by the coalition government in 2010, the Two Tier 3 The UK TUPE regulations allow for a transferee to object but he/she will be treated as having resigned rather than enjoying protection for wrongful dismissal or redundancy compensation. The exception is where the transfer can be shown to mean a significant deterioration in conditions.
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