The Minister for the Cabinet Office withdrew the Two-Tier code with effect from 13 December 2010.

The code placed requirements on contractors regarding the terms and conditions of new joiners working alongside ex-public sector employees. It has been replaced by new Principles of Good Employment Practice which provides a more flexible guide giving employers the power to build a motivated workforce.

In relation to employees' terms and conditions, the Principles of Good Employment simply says:  

"Where a supplier employs new entrants that sit alongside former public sector workers, new entrants should have fair and reasonable pay, terms and conditions. Suppliers should consult with their recognised trade unions on the terms and conditions to be offered to new entrants."

The idea behind this is clearly to reduce costs in the public sector, and enable more competitive pricing from the private sector when tendering for work from the public sector.