Contractor signs two-tier workforce agreement

General unions GMB and T&G have negotiated a deal with Compass Group, one of the largest catering and business services contractors in the world, to tackle the two-tier workforce.

The arrangement is along the lines of the government's code covering local council services agreed last year and ensures that the terms and conditions of all transferred staff are protected. There is also a commitment that new starters will have the same terms and conditions as those that transfer, including an equivalent final salary pension scheme.

However, Compass has agreed to apply the agreement to future public sector contracts outside local government, provided that the client ensures a level playing field with other bidders.

Jack Dromey, T&G deputy general secretary said, "It is an irony that Britain's biggest contactor is ahead of public policy on ending the shameful practice of paying new starters less. Tony Blair should now honour in full last year's pledge to end the two-tier labour market in public services".

* A growing number of Private Finance Initiative (PFI) projects are failing to attract bidders, according to a report by consultants Ernst and Young. PFI grows up, says that power is shifting from the public to the private sector, with contractors cherry picking the projects they are prepared to bid for, leaving the public sector without enough suppliers to fill their tender lists.