Linking public procurement and social dialogue to promote fair work practices in Scotland (United Kingdom)
In Scotland, the Fair Work Convention was established in 2015 as an independent advisory body to help fair work become a hallmark of Scotland’s workplaces and economy. The Fair Work Convention comprises representatives of different stakeholders, including trade unions, local government, individual employers, civil society organisations, academic experts and practitioners.
In 2016, it published its first report setting out a vision for fair work in Scotland, the Fair Work Framework, which has since underpinned the government’s approach to making Scotland a Fair Work Nation by 2025.
In addition, while labour law falls under the competence of the UK government only, the Scottish government acknowledged that there are still tools at its disposal for promoting fair work across the nation, one of them being public procurement. With this in mind, the government also introduced its flagship policy, Fair Work First (FWF), in 2018.
The FWF policy promotes the application of fair work criteria to grants, other funding arrangements and contracts awarded across the public sector. The five fair work criteria include:
- Appropriate channels for effective voice, such as trade union recognition;
- Investment in workforce development;
- No inappropriate use of zero-hour contracts;
- Action to tackle the gender pay gap and create a more inclusive workplace;
- Providing fair pay for workers (for example, payment of real living wage).
In 2021, ministers announced the expansion of the FWF policy to include two new elements tackling specific labour-market issues arising from COVID-19: offering flexible and family-friendly working practices for all workers from day one of employment; and opposing the use of fire and rehire practices.
Unlike environmental, social and labour laws, Scotland’s procurement policy does not underpin compliance with the FWF policy. As a result, before undertaking a procurement exercise, a contracting authority must determine whether it is relevant and appropriate to include questions on FWF. In assessing this, it is important that contracting authorities consider all relevant factors and justify their inclusion in any decision-making process. These factors may include a risk that workers might be subject to exploitative practices, the employer’s opposition to trade union recognition and access, and evidence that working conditions are making recruitment and retention problematic.
According to the 2021 report on fair work, the contracts whereby the Scottish Government uses FWF principles as award criteria amounted to GBP 619.8 million.
- GBP 96 million: Fair Start Scotland contracts, designed to help people get into work
- GBP 42 million: Electronic Monitoring of Offenders contracts
- GBP 8 million: Electronic Counting of Votes contracts
- Fund Management contract to support delivery of the GBP 800,000 Workplace Equality Fund 2019/20
- GBP 400 million: Facilities Management contract
- GBP 17 million: Scottish National Standardised Assessments contract
Source: Scottish Government (2021).
A central feature of FWF policy is that it explicitly recognises the important role of effective voice, such as can result from trade union recognition. Co-determination of working practices is highlighted in the guidance as key to delivering fair work effectively.
A central dimension of the FWF policy is security of employment. This is set out in two FWF criteria in the Fair Work Measurement Framework which focus on avoiding the inappropriate use of zero-hour contracts and opposing the use of 'fire and rehire' practices.
The FWF policy in Scotland has sought to ensure that organisations bidding for public sector contracts do not use inappropriate zero-hour contracts (ZHCs) as they create uncertainty for workers over their employment status and expose them to income insecurity. The Scottish Government has also been encouraging businesses to commit to not using such ZHCs through the Scottish Business Pledge.
The Scottish Government firmly opposes the inappropriate use of zero-hour contracts and other non-standard types of employment that offer workers minimal job or financial security. Although zero-hour contracts fall under employment law reserved to the UK Government, we are committed to avoiding inappropriate use of zero-hour contracts throughout Scotland.
In October 2021, the Scottish Government announced its support for the Living Hours Accreditation Programme, launched by the Living Wage Foundation in 2019. Employers who join the scheme commit to providing:
- at least 4 weeks’ notice for every shift (with guaranteed payment if shifts are cancelled within this notice period)
- a guaranteed minimum of 16 working hours every week (unless the worker requests otherwise)
- a contract that accurately reflects hours worked.
The Poverty Alliance, which is the Scottish arm of the Living Wage Foundation, administers the accreditation scheme. Out of around 20 living hours accreditations across the United Kingdom, more than half are currently in Scotland.
“Fire and rehire” practices
Dismissal and re-engagement, commonly known as 'fire and rehire', is a practice whereby employers dismiss workers who refuse to agree to proposed new terms of employment and later re-engage them on different, often less generous, terms. The practice is not unlawful but may expose employers to statutory and contractual claims.
During the COVID 19 pandemic, some employers in the United Kingdom used this approach, which attracted significant media attention and criticism. Research by the Trades Union Congress (TUC) found that in 2020, nearly one in ten (9%) workers were threatened with fire and rehire.
In response, the Fair Work Convention Co-Chairs co-authored a blog article suggesting that fire and rehire practices are incompatible with fair work.
Its use flies in the face of normal contractual relations, which require genuine agreement to any contractual change; it undermines the need for constructive dialogue within workplaces as well as good workplace relationships, and may well undermine employee trust and commitment long beyond its immediate use, harming businesses along the way.
In September 2021, the Scottish Government expanded the scope of the FWF to address the issue of fire and rehire practices. Now, employers wishing to access public sector grants or other funding will be expected to commit to not using such practices. An employer contemplating changes to terms and conditions should ensure that workers’ voice is fully considered through consultation.
The Scottish experience illustrates that labour regulation, when linked to public procurement via social dialogue, can help promote fair work practices, providing workers with more job security and stability.
Involving trade unions as well as private, public and third-sector employers in the design and operation of fair work criteria in public procurement offers considerable benefits:
It promotes establishing a common vision for fair work that is supported by key stakeholders.
It increases dialogue and contributes to developing constructive industrial relations between trade union representatives, employers and government agencies.
If employers and staff representatives engage constructively to promote the appropriate use of zero-hour contracts or negotiate a collective agreement on contractual changes, there are benefits to both sides.
Employers may gain access to increased margins of adjustment to market shocks and may build secure, sound relationships with staff and their representatives.
Workers, in turn, could experience more secure employment and a stronger collective voice in the workplace.
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