Tenders Direct Blog

Comment from the experts at Tenders Direct.

The Living Wage – The New Public Procurement Guidance

Posted by Cindy Cheng on September 9, 2016

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The Scottish Government launched its new public procurement guidance to promote fair work practices last October. Now that we are almost three quarters of the way through 2016, are you familiar with the new guidance yet?

Under the new guidance, all local authorities, health boards and other public bodies will have to consider how they might enable the payment of the living wage through their contracts:

“In respect of how to apply the Living Wage in procurement processes the Scottish Government has obtained clarification from the European Commission. This confirms that contracting authorities are unable to make payment of the Living Wage a mandatory requirement as part of a competitive procurement process where the Living Wage is greater than any minimum wage set by or in accordance with law. In the UK, this is the National Minimum Wage.”

The European Commission has twice confirmed that any requirement on contractors, as part of a public procurement process or public contract, to pay their employees a living wage set at a higher rate than the UK’s National Minimum Wage is unlikely to be compatible with EU Law.

The Scottish Government is therefore prevented by EU procurement law from making the Living Wage mandatory in contract agreements, but the new statutory guidance means that companies who want to secure business with public bodies are now obliged to sign up to these fair work conditions for anyone working on the contracts.

Those bidding for public contracts will now be expected to adopt fair work practices, which may include –

  • Paying the Living Wage.
  • No unnecessary use of zero hours contracts.
  • Giving workers an active voice in the workplace.

As you can see, the new public procurement guidance encourages public sector bidders to consider how they treat their workers – especially how much they pay them. Local authorities and other public bodies who are creating these public contracts are being advised by Scottish Government to look favourably on bidders who adopt a culture of treating their workers well – this will surely discourage poor employment practices and push bidders in the right direction and help ensure workers across Scotland are treated fairly.

It should be highlighted that the living wage isn’t the only element that will be evaluated in public contracts – although being an accredited Living Wage employer would probably enhance the bidder’s reputation in the first instance. Ultimately, The Scottish Government’s ambitions are to promote fair work practices, as well as endorsing the Living Wage. Local authorities will want to see policies which demonstrate how the contractors comply with relevant employment, equality and health and safety law and human rights standards.

Personally, I think it’s commendable to see that the Scottish public sector is leading the way in securing a fair deal for workers even though the Living Wage Act is still not compulsory – yet. Despite this, it is still a huge step in influencing public sector bidders to take on board the Living Wage as well as other employment policies. The main challenge for bidders remain in recognizing that fair work practices and the Living Wage come at a “price” and for them to figure out how they can achieve value for money whilst ensuring that economic operators comply with fair work practices as some bidders may regard this as financially challenging  -and too onerous.

Further information on the Statutory Guidance on the Selection of Tenderers and Award of Contracts addressing fair work practices including the Living Wage in procurement can be found  -here.

 

 

 

 

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