Section 32 — Public sector outsourcing: protection of workers

(1) The Procurement Act 2023 is amended as follows.

(2) After Part 5 insert— Part 5A Outsourcing: protection of workers Application of this Part 83A (1) This Part provides for a Minister of the Crown, the Scottish Ministers and the Welsh Ministers to make provision for the protection of workers in relation to relevant outsourcing contracts (see section 83B). (2) Accordingly, in this Part, “appropriate authority”— (a) means— (i) a Minister of the Crown, (ii) the Scottish Ministers, or (iii) the Welsh Ministers, and (b) does not include a Northern Ireland department. (3) In addition to the restrictions in section 113, a Minister of the Crown— (a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a reserved procurement arrangement; (b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement. (4) The Scottish Ministers— (a) may only exercise a power under this Part for the purpose of regulating— (i) devolved Scottish authorities, or (ii) procurement under a devolved Scottish procurement arrangement; (b) may not exercise a power under this Part for the purpose of regulating— (i) joint or centralised procurement under a reserved procurement arrangement, or (ii) joint or centralised procurement under a devolved Welsh procurement arrangement. (5) In addition to the restrictions in section 111, the Welsh Ministers— (a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a devolved Welsh procurement arrangement; (b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement. (6) This Part does not apply in relation to— (a) a private utility; (b) a person referred to in regulation 4(1)(b) of the Utilities Contracts (Scotland) Regulations 2016 (S.S.I. 2016/49); (c) a devolved Welsh authority listed in Schedule 1 of the Social Partnership and Public Procurement (Wales) Act 2023 (asc 1); (d) procurement under a transferred Northern Ireland procurement arrangement, except to the extent that the procurement— (i) is carried out by a devolved Scottish authority, and (ii) is not joint or centralised; (e) a transferred Northern Ireland authority, except in relation to— (i) procurement under a reserved procurement arrangement, (ii) procurement under a devolved Scottish procurement arrangement, or (iii) procurement under a devolved Welsh procurement arrangement. (7) For the purposes of this section, procurement under a procurement arrangement is “joint or centralised” if as part of that procurement arrangement a contract is to be awarded following a procedure or other selection process carried out— (a) jointly by a devolved Scottish authority and another contracting authority which is not a devolved Scottish authority, or (b) by a centralised procurement authority or equivalent body. Relevant outsourcing contracts 83B (1) In this Part, “relevant outsourcing contract” means a contract in relation to which conditions A to C are met. (2) Condition A is met where the contract— (a) is a public contract under this Act, or (b) is a contract regulated by Scottish procurement legislation. (3) Condition B is met where the contract— (a) is a contract for the supply of services that include the performance of functions that are or have previously been performed by the contracting authority, or (b) is— (i) in the case of a public contract, a framework for the future award of a contract referred to in paragraph (a), or (ii) in the case of a contract regulated by Scottish procurement legislation, a framework agreement the purpose of which is to establish the terms governing a contract referred to in paragraph (a). (4) Condition C is met where the functions referred to in subsection (3)(a) are, or are expected to be, performed by individuals (“transferring workers”) who— (a) in performing the functions, are employed by the supplier or a sub-contractor under a worker’s contract, and (b) were employed by the contracting authority under a worker’s contract in performing functions of the same kind. (5) For the purposes of this Part— (a) “contract regulated by Scottish procurement legislation” means a contract the procurement of which by a devolved Scottish authority is regulated by Scottish procurement legislation; (b) in relation to a contract regulated by Scottish procurement legislation— (i) “contracting authority” means a devolved Scottish authority that is a contracting authority within the meaning of the relevant Scottish procurement legislation; (ii) “framework agreement” has the same meaning as in the relevant Scottish procurement legislation; (iii) “supplier” means an economic operator within the meaning of the relevant Scottish procurement legislation; (iv) “the relevant Scottish procurement legislation” means the Scottish procurement legislation regulating the procurement of the contract. Power to specify provision for inclusion in relevant outsourcing contracts 83C (1) An appropriate authority may by regulations specify provision to be included in a relevant outsourcing contract for the purpose of ensuring that— (a) transferring workers of a specified description are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and (b) workers of the supplier or a sub-contractor who are not transferring workers and are of a specified description are treated no less favourably than those transferring workers. (2) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must— (a) take all reasonable steps to ensure that provision specified under subsection (1) is included in the contract; (b) where provision specified under subsection (1) is included in the contract, take all reasonable steps to secure that such provision is complied with. (3) Subsection (2) does not apply— (a) where the contracting authority or the relevant outsourcing contract is of a specified description, or (b) in specified circumstances. (4) In this section, “specified” means specified in regulations made by an appropriate authority. Code of practice on relevant outsourcing contracts 83D (1) An appropriate authority must prepare and publish a code of practice containing guidance to contracting authorities for the purpose of ensuring that, where a contracting authority carries out the procurement of a relevant outsourcing contract— (a) transferring workers of a description specified in the code are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and (b) workers of the supplier or a sub-contractor who are not transferring workers and are of a description specified in the code are treated no less favourably than those transferring workers. (2) An appropriate authority— (a) may amend or replace a code published by it under subsection (1), and (b) must publish any amended or replacement code. (3) A code published under subsection (1) or (2) must— (a) in the case of a code published by a Minister of the Crown, be laid before Parliament; (b) in the case of a code published by the Scottish Ministers, be laid before the Scottish Parliament; (c) in the case of a code published by the Welsh Ministers, be laid before Senedd Cymru. (4) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must have regard to the code of practice for the time being published under subsection (1) or (2). (5) This section does not require an appropriate authority to do anything which the authority does not have power to do (see section 83A and Part 11). Interpretation of this Part 83E (1) In this Part— “appropriate authority” has the meaning given in section 83A(2); “contract regulated by Scottish procurement legislation” has the meaning given in section 83B(5)(a); “relevant outsourcing contract” has the meaning given in section 83B; “transferring worker”, in relation to a relevant outsourcing contract, has the meaning given in section 83B(4); “worker” and “worker’s contract” have the same meaning as in the Employment Rights Act 1996 (see section 230 of that Act). (2) For the purposes of this Part, in relation to a contract regulated by Scottish procurement legislation, “contracting authority”, “framework agreement”, “supplier” and “the relevant Scottish procurement legislation” have the meaning given in section 83B(5)(b). Power of Scottish Ministers to amend this Part 83F The Scottish Ministers may by regulations modify section 83A, 83B or 83E in consequence of a modification of Scottish procurement legislation.

(3) In section 2 (contracting authorities), after subsection (1) insert— (1A) But see also section 83B(5)(b)(i) (which provides for “contracting authority” to have an extended meaning in relation to certain contracts regulated under Part 5A (outsourcing: protection of workers)).

(4) In section 122 (regulations)—

(a) in subsection (4) (regulations of Ministers of the Crown subject to affirmative procedure), after paragraph (i) insert— (ia) section 83C (provision for inclusion in relevant outsourcing contracts); ;

(b) in subsection (10) (regulations of Welsh Ministers subject to affirmative procedure), after paragraph (g) insert— (ga) section 83C (provision for inclusion in relevant outsourcing contracts); ;

(c) in subsection (14) (regulations of Scottish Ministers subject to affirmative procedure), before paragraph (a) insert— (za) section 83C (provision to be included in relevant outsourcing contracts); (zb) section 83F (power to amend section 83A, 83B or 83E); .

(5) In section 123 (interpretation), in subsection (1), in the definition of “appropriate authority”, at the end insert— (but see section 83A(2) for a different meaning of “appropriate authority” in Part 5A (outsourcing: protection of workers)); .

(6) In section 124 (index of defined expressions), for the entry for “appropriate authority” substitute— appropriate authority (except in Part 5A) section 123 appropriate authority (in Part 5A) section 83A .

(7) In Schedule 9A (procurement by devolved Scottish authorities), at the appropriate place insert— Part 5A (outsourcing: protection of workers) .