01 July 2026 
Ashley Shelbrooke, Procurement Specialist
The reinstatement of the Two Tier Code (TTC) under the Employment Rights Act 2025 marks a major statutory shift which the government intends to eliminate unfair workforce practices in outsourced public services. The TTC consists of a set of regulations, the Code and supporting guidance. Contracting authorities will have a legal obligation to "take all reasonable steps" to comply with the regulations and "have regard" to the code.
The TTC comes into scope when a public contract involves a staff transfer from the original public sector contracting authority to an external supplier (via TUPE or other statutory transfer schemes), to carry out a service that was previously carried out in-house. Any new or existing supplier or subcontractor workers deployed alongside those transferred staff to work on that service must be treated "no less favourably" regarding their terms and conditions.
The TTC regulations will set out the contract terms that contracting authorities must take all reasonable steps to include in relevant outsourcing contracts. These will cover enforcement, dispute resolution, subcontractors, performance monitoring and reporting, and termination rights (should a supplier not comply with the Code).
The Cabinet Office have produced a factsheet covering the TTC, including information such as timescales and further details, which members can view on gov.uk here.
