Fair work and procurement

We believe that a supplier's approach to fair work practices, including paying the real Living Wage, can have a positive impact on the quality of goods, works and services in a public contract.

We expect:

  • public bodies to promote fair work in all relevant procurement processes while ensuring the appropriate balance between quality and cost of the contract, including the impact of cost on working conditions
  • suppliers delivering public contracts to adopt and demonstrate appropriate fair work practices, ensuring that these are delivered for all workers engaged on delivering the public contract

Living Wage as a requirement in procurement

We consider the payment of the real Living Wage to be the most significant way a supplier can demonstrate its commitment to fair work practices.

The real Living Wage is a rate of pay which is enough to ensure that those receiving it can have an acceptable standard of living, and applies to all employees 18 and over.

It is a voluntary wage rate which is calculated by the Resolution Foundation and overseen by the Independent Living Wage Commission. The rate is reviewed annually.

The real Living Wage is different to the National Minimum Wage (including the 'national living wage') which is the legal minimum an employer must pay an employee and is set by the UK Government.

While employment law is reserved, we have examined how payment, by contractors, of the real Living Wage can be taken into account as part of a public procurement process.

The European Commission has confirmed that public bodies cannot mandate the payment of the real Living Wage as part of a procurement process, for those working on the delivery of a contract.

It is not possible to reserve any element of the overall tender score specifically to payment of the real Living Wage. However, it is possible to encourage contractors to pay the real Living Wage and public bodies are required to include a question on this in relevant regulated procurements.

Fair work procurement guidance

We have published the following guidance covering fair work practices, including the Living Wage, in procurement: