Contractors working for umbrella companies or via their own limited companies will be heartened by a recent announcement by Cabinet Officer Minister, Francis Maude. A long-standing two-tier arrangement governing payroll outsourcing in the public sector is to be abolished with immediate effect.

To be more precise, the Code of Practise on Workforce Matters in Public Sector Contracts – a set of regulations which has governed public sector arrangements for years – is to be placed on the legislative bonfire. The government believes that the code has served chiefly to relegate service providers external to the public sector to a Cinderella status, privileging an “in-group” which may not necessarily have been the most cost efficient or the most skilled. In these deficit reducing times, such conventions are coming under gimlet-eyed ministerial scrutiny.

In one fell swoop, rules which have hindered small and medium sized companies, social enterprises, charities and co-operatives alike from playing a fuller part in running public services will disappear. Mr Maude claimed that the shredding of the code is designed to deliver better value for money for taxpayers, not least by encouraging greater competition in fields such as payroll services.

He went on to clarify that the reform will not affect the existing provisions laid out in the Employment Act 2008 or rules pertaining to the Transfer of Undertakings (Protection of Employment) legislation. Public bodies will also continue to be obliged to promote equal opportunities and eradicate unlawful discrimination.

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