Fair Work First: policy evaluation

9. Conclusions and Recommendations

9.1 Conclusions

The following conclusions are grouped into sub-sections, addressing the core research objectives.

9.1.1 Whether Fair Work First has been delivered as intended

On the whole, Fair Work First appears to have been delivered successfully in a challenging economic environment, with processes increasingly well embedded among surveyed buyers and funders, due judgment being exercised in applying the criteria, strong use of relevant information and guidance to guide practices, and clear expectations being set for employers. However, some employers have experienced financial challenges meeting the criteria, while certain aspects of the guidance could be strengthened.

1. Surveyed buyers and funders appear to have increasingly embedded Fair Work First criteria as part of contracts and grants since October 2021 and July 2023 respectively.

In the years since Fair Work First was first introduced, surveyed buyers and funders have increasingly embedded the policy and criteria through contract and grant arrangements, such that this is increasingly the default rather than an experimental ask of employers. The proportion of regulated contracts awarded by public bodies that contain a Fair Work First criterion has increased year on year, as has the total number and value of grants with FWF conditions attached.

More than half of surveyed buyers and funders (38 respondents, 52%) say they always ask suppliers to self-declare or provide evidence that they pay at least the real Living Wage (at the time of the survey), compared with 18 (24%) when reflecting on their approach prior to October 2021. Furthermore, almost two thirds of surveyed buyers and funders (35, 64%) attribute this push to Fair Work First.

As part of grant arrangements, more than half of surveyed funders (21, 53%) say they always require evidence relating to the real Living Wage now, compared with 5 (12%) when reflecting on their approach July 2023. With respect to effective workers’ voice, such as trade union recognition, 14 (35%) say they always ask for evidence now, compared with 4 (10%) when reflecting on their approach prior to July 2023.

2. Surveyed buyers and funders appear to be exercising due judgment and proportionality in applying Fair Work First criteria.

Fair Work First policy implementation appears to have matured to the point that surveyed buyers and funders are increasingly reflective and adapting their practices, such as using due judgment and proportionality in how to apply Fair Work First criteria in different contexts. Some follow consistent patterns in what they expect employers to evidence and how they assess that evidence, whereas others tailor this, for example depending on the type of contract (including sector of operation) or size of grant.

3. Most surveyed buyers, funders and employers find Fair Work First information and guidance to be helpful, though sources could be clearer and better tailored, with more guidance on what constitutes good evidence.

There is a range of Fair Work First information and guidance available, which has been helpful for most surveyed buyers, funders and employers, helping to increase their understanding of criteria and processes since changes were introduced. The guidance is generally viewed as comprehensive, clear, and practical, particularly at explaining the criteria, supporting consistency, and providing examples or model questions.

However, a minority of surveyed buyers and funders consider the guidance to be too complex and fragmented. There is some confusion around what good evidence should look like and how the criteria should be applied in specific scenarios, such as for consortium bids, special purpose vehicles, use of subcontractors and international bidders.

The guidance can be difficult to interpret for certain audiences, such as surveyed micro businesses, charities and employers of rural or seasonal workers. The effective workers’ voice criterion appears to have created most confusion among surveyed employers – again with respect to what good evidence looks like. This criterion also appears to create the most operational difficulties, including anecdotal evidence of tensions and unproductive negotiation loops between employers and trade unions.

4. Fair Work First has helped to set clear expectations for surveyed employers around fair work, though meeting the criteria can reportedly create financial challenges for certain sectors, e.g. those characterised by low pay or short-term funding cycles, and in some cases a challenging administrative burden.

Fair Work First criteria with supporting guidance appears to have helped focus surveyed employers’ attention and set transparent expectations relating to fair work practices. However, less than a third of surveyed employers (31%) appear to have had a completely smooth experience meeting Fair Work First criteria. The most pressing challenges are cost pressures resulting from having to pay higher wages (45%) followed by uncertainty over future increases to the real Living Wage (37%). These pressures are likely to have been faced to some degree irrespective of Fair Work First, given the wider economic challenges described in section 1.1.3.

Some interviewed buyers and funders note that smaller suppliers tend to find Fair Work First criteria disproportionately complex or burdensome to provide evidence against requirements, indicating that requirements could be streamlined. This is backed up by the employer survey, with 39% of micro employers mentioning the burden of evidence as a challenge, compared with 29% across all size-bands.

Surveyed employers in certain sectors also appear to face disproportionate barriers, especially in care and hospitality, characterised by low pay, unsociable hours and comparatively less contact and experience with public procurement. Third sector employers also face their own challenges, including unpredictable funding cycles, strong competition, small staffing numbers and resource constraints, whilst culture sector challenges include high prevalence of freelance workers. This finding emerged from desk research, stakeholder interviews and survey evidence.

9.1.2 The impact on organisations in receipt of contracts – as well as organisations in receipt of grants – with Fair Work First criteria applied

The evidence suggests Fair Work First has had a positive impact in strengthening employers’ fair work commitments. This appears to have been driven in part by changes to procurement policy in October 2021 and the introduction of conditionality in grants in July 2023. However, Fair Work First is one of several influencing factors that are difficult to disentangle due to the lack of baseline data.

5. Since new Fair Work First policy arrangements were introduced in October 2021 and July 2023 (explained in section 1.2), most surveyed employers report an increased understanding of Fair Work First, as well as a strengthened commitment to all criteria.

Almost three quarters of surveyed employers (72%) say their understanding of Fair Work First has increased since October 2021. There are also notable increases in the proportions of employers saying they have fully embedded the seven Fair Work First criteria (with or without impact monitoring). The biggest change relates to paying at least the real Living Wage (increase of 20% saying this is fully embedded compared with October 2021).

Among surveyed grant recipients, almost two thirds (64%) say their understanding of Fair Work First has increased since July 2023. Among this cohort, there has also been a strengthening of commitment to all criteria since July 2023, most prominently in providing appropriate channels for effective workers’ voice, such as trade union recognition (43% saying their commitment has increased since then).

6. Fair Work First appears to play a key role in sharpening and reinforcing surveyed employers’ existing fair work practices. While it is difficult to attribute Fair Work First as a sole driver in influencing workplace practices in funded organisations, evidence suggests that the policy has helped to ensure that public funds are reaching organisations which are modelling fair work practice.

Fair Work First has made a direct difference to some surveyed employers’ levels of commitment to Fair Work First criteria – ranging from 31% in the case of opposing fire and rehire practices, to 43% in the case of paying all workers at least the real Living Wage. The policy has prompted regular review and reflection by surveyed employers – strengthening or formalising existing practices such as effective voice mechanisms – rather than transforming them. In the case of the real Living Wage, the policy has encouraged some surveyed employers to extend this to all staff rather than teams allocated to specific projects, including apprentices and younger workers, and to review pay structures and differentials.

It is important to acknowledge that a wide range of other influencing variables have also driven surveyed employers’ fair work commitments. More than three quarters of employers (79%) say fair work practices were already embedded in the culture of their organisation and its leadership, alongside the need to be competitive in the market (mentioned by 50%) and existence of the Living Wage and/or Living Hours Employer accreditation scheme/s (46%).

7. Real Living Wage expectations set by Fair Work First appear to have exacerbated pay-related unintended consequences for a minority of surveyed employers.

For most surveyed employers (81%), Fair Work First has not triggered any unintended consequences that they could report. However, for some, real Living Wage expectations appear to have exacerbated existing financial pressures such as those stemming from inflation, annual increases in the NMW and real Living Wage, as well as increases to employer NICs.

Another key concern is reduced pay differentiation between entry-level and more experienced roles, with a resulting morale impact. There are also risks to surveyed employers’ commitments to apprenticeships stemming from Fair Work First applying the real Living Wage to this cohort, despite exception arrangements set out in the Fair Work First Guidance.

8. A minority of surveyed workers have identified an improvement in their own employer’s levels of commitment to fair work practices since October 2021.

Views are somewhat divided among surveyed workers as to whether their own employer’s fair work commitments have improved since October 2021. Greatest improvements according to surveyed workers are in relation to offering flexible and family friendly working practices (39% have experienced an improvement where they work); paying at least the real Living Wage (35%) and offering appropriate channels for effective workers’ voice, such as trade union recognition (33%).

9.1.3 The impact on workers within organisations in receipt of contracts – as well as organisations in receipt of grants – with Fair Work First criteria applied

Workers employed by organisations in receipt of public sector contacts or grants report good fair work practices, although – in a similar vein to employers – it is difficult to determine the extent to which Fair Work First has contributed to this.

Note that the evaluation did not attempt to differentiate between workers in organisations specifically in receipt of: i) contracts only; ii) grants only; or iii) contracts and grants – the reason being not all workers could be expected to know this, combined with their right to anonymity.

9. Most surveyed workers in organisations in receipt of public sector contracts or grants are paid at least the real Living Wage, although there are significant differences between some settings and worker characteristics.

From a topline perspective, almost all surveyed workers (96%) appear to be paid at least the real Living Wage, though the proportion is higher among workers in public sector and private sector organisations (98% and 97% respectively) compared with workers in third sector and other organisations (90%) – a statistically significant difference. Additionally, the proportion of surveyed workers saying they are paid at least the real Living Wage is statistically significantly different among workers aged 50-64 (98%) compared with 16-24-year-olds (91%). Indeed, research by the Living Wage Foundation in 2023 – Precarious pay and uncertain hours – revealed a ‘U-Shaped’ trend in both insecure work and low paid insecure work, with those at the lower and upper end of the age distribution being at the greatest risk, and those in the middle (from around 25-50) being at lowest risk.

10. Most surveyed workers agree that their employer offers appropriate provisions for effective workers’ voice, such as trade union recognition – more so at an individual level than a collective level – but again experienced differently within some settings and worker characteristics.

From a topline perspective, more than three quarters (78%) of surveyed workers agree that their employer provides appropriate individual channels for effective voice, compared with 63% agreeing that their employer provides appropriate collective channels.

Provision of collective channels appears to be comparatively rarer in surveyed third sector organisations (in which 41% of workers report having experienced these channels) compared with public and private sector organisations (72% and 62% of workers respectively) – a statistically significant difference. Similarly, collective channels exist in very large and large surveyed organisations (77% and 71% respectively) to a greater extent than those in medium, small and micro organisations (48%, 42% and 36% respectively) – again statistically significant differences.

The opposite is true for individual channels, which are more prominently offered in the third sector, while all (100%) of micro organisations say they offer individual channels compared with small, medium and large organisations (86%, 72% and 89% respectively) – a statistically significant difference.

11. Where fair work practices are experienced by surveyed workers, these appear to have wider positive impacts, though the application of these practices can feel uneven within some organisations.

More than half of surveyed workers report experiencing a positive work culture, improved staff-wellbeing and good workforce retention within their organisations. Furthermore, for workers interviewed following the survey, fair work practices have contributed to a supportive workplace culture where people feel content in their roles, a sense of wellbeing and overall satisfaction.

However, a minority of interviewed workers believe that fair work arrangements are unevenly applied within their organisations or operated as a “tick box” exercise rather than being fully embedded in day-to-day working.

9.2 Recommendations

The following recommendations are for the Scottish Government to consider in conjunction with key partners.

1. Work with key stakeholders to ensure Fair Work First works for employers and workers in a range of settings to overcome challenges identified.

Meeting Fair Work First criteria can be especially challenging for employers in sectors characterised by low pay or short-term funding cycles, while smaller employers can find Fair Work First criteria disproportionately complex or burdensome in terms of providing evidence against requirements. The evidence has also revealed differences between sectors in the proportion of workers paid at least the real Living Wage or with access to appropriate collecting channels for effective workers’ voice.

Ensuring Fair Work First works for a wider range of employers and workers should involve working more closely with key stakeholders as co-producers and accountability partners in the interests of encouraging collective action and a shared mission on Fair Work First.

The Scottish Government has already established strong stakeholders relationships to help shape thinking and policy relating to Fair Work First, such as public sector funder representative, employer representative and worker representative bodies, as well as equality organisations and other advisory bodies. These relationships can be even more valuable in light of this evaluation and the data produced, to help consider how Fair Work First can work best for employers and workers in range of settings and to overcome challenges identified.

Possible steps might include co-designing Fair Work First criteria changes and guidance updates; co-developing toolkits to help particular groups of employers meet Fair Work First criteria; identifying Fair Work First ambassadors in different sectors who can model good practice and mentor other employers; and sharing lessons learned from buyers, funders and employers who are have established smooth approaches.

2. Work with buyers and funders to develop and set clear expectations and assurance mechanisms that balance: i) robust scrutiny and credible validation of evidence; and ii) the risk of bureaucratic overload on buyers/funders and employers.

The most frequently mentioned challenge faced by surveyed buyers and funders when implementing Fair Work First is verifying employers’ commitments and evidence.

A more proportionate approach based on contract/grant value should therefore be developed that is both risk‑based and worker‑centred, with a focus on validating the right things in the right way. This could be achieved using a tiered approach. For example, a baseline tier for small contracts and grants might involve requiring evidence of policies, not just statements; and asking for worker‑side confirmation where possible (survey data, trade union statement or representative feedback). Standardised templates can help buyers and funders be clear in what to ask for, for example the current Confirmation Template asks for the name of the trade union(s) or position of other worker representative providing confirmation.

A second tier might involve asking for evidence of improvements, workforce data, evidence of worker voice mechanisms, and spot checks/follow-up enquiries. A third tier might involve independent verification, joint employer-worker statements on progress, and clear consequences for non-delivery.

3. Ensure Fair Work First policy and criteria continue to be stretching and act as a key differentiator for employers that meet the criteria.

Whilst Fair Work First policy is evidently encouraging employers to strengthen and sharpen existing good practices, there could be room to go further. Additionally, rollout of the Employment Rights Act 2025 means that certain aspects of fair work will become a statutory requirement. Both of these factors make it important that Fair Work First criteria continue to evolve and act as a differentiator for those employers already going above and beyond, as well as other employers compelled to make changes as the Act rolls out.

Possible steps might involve explicitly reframing Fair Work First around the wider practices as set out in the Fair Work Convention’s five dimensions of fair work, notably effective voice, fulfilment, opportunity, respect and security. Examples could include making collective bargaining and trade union access a more central feature where trade unions are present and expecting good‑faith engagement where they are not; placing stronger focus on quality jobs and good job design; providing evidence of progression routes for underrepresented groups; and placing greater emphasis on living hours and predictable work as well as the real Living Wage.

4. Consider whether a more flexible or proportionate approach should be factored into Fair Work First implementation to reflect differences in organisational size, sector, and operating context.

The evidence suggests that employers would value a more flexible, proportionate approach to Fair Work First rather than a “one size fits all” approach, especially where they face particular barriers. For example, smaller organisations may face greater financial, administrative and operational barriers to meeting the evidence requirements; while rural economy sectors (such as agriculture or tourism) may be more reliant on casual or seasonal staff, who are traditionally lower paid, or be less able to adopt digital technologies.

Notwithstanding recommendation 3 that focuses on ensuring the policy remains stretching, the Scottish Government could work with key stakeholders to develop clearer guidance for buyers and funders on how to adapt the criteria for particular settings and how to convey this to employers. An example might include acknowledging that weather-dependent and peak-season roles may be deemed an appropriate use of casual contracts.

5. Review and enhance current Scottish Government Fair Work First Guidance (the most prominently used source) to improve clarity for buyers, funders and employers.

A minority of surveyed buyers and funders find the guidance to be complex and difficult to navigate, especially due to lots of hyperlinking. This can make it time-consuming to use and difficult to identify what is most relevant or how it should be applied in specific situations. Some employers find it difficult to form a clear picture of expectations and what constitutes strong evidence in relation to Fair Work First criteria.

The Scottish Government therefore should take steps to simplify the guidance, providing clearer explanations of minimum requirements, what constitutes acceptable evidence, exceptions, terminology (such as what is meant by “inappropriate” use of zero hours contracts) and examples to support consistent interpretation and application. It would also help to tailor the guidance to specific sectors, size-bands and contexts, such as consortium/subcontracting arrangements and international bids.

There would also be merit in considering how the Scottish Government’s Fair Work First guidance articulates thresholds for grant funders seeking declarations and/or evidence from employers with respect to the real Living Wage and appropriate channels for effective workers’ voice, such as trade union recognition. Since it is understood that some funders can apply their own thresholds, this may on the one hand be perceived as an inherent flexibility, but for employers, it potentially creates an inconsistent experience. Whilst the evaluation did not identify any evidence of grant funders intentionally setting higher thresholds to minimise the administrative burden in gathering and assessing evidence, this remains a possible unintended consequence of the current approach.

6. Develop a mechanism for the Scottish Government to track the progress of Fair Work First implementation more easily and build in stronger accountability for public funding.

At present, the Scottish Government draws together data on Fair Work First as part of contract and grant arrangements via several mechanisms. Data are not necessarily comprehensive and require considerable time and effort to analyse over a lengthy time period. Similarly, buyers and funders appear to report on Fair Work First to different extents, depending on what senior managers in their own organisations prioritise and want to see.

To address this, the Scottish Government should consider developing a digital portal through which buyers and funders can report on Fair Work First commitments and evidence of employers’ commitments in a more frequent, light touch and measurable way. This should allow activity, change and improvement to be measured more systematically to identify what is working well and what further interventions may be needed.

A shared system of supplier/grant holder commitments would also minimise the need for buyers and funders to re-ask employers for evidence they have already submitted during a specified recent time period (e.g. 12 months).

7. Develop a more robust understanding of the populations of buyers, funders and employers in receipt of contracts and grants with Fair Work First conditions attached.

This recommendation stems from the types of Fair Work First process (and burden of evidence) challenges faced by buyers, funders and employers, as well as the limitations associated with undertaking this evaluation, including being able to form a representative sample.

The Scottish Government should consider forming a national database of buyers, funders, suppliers and grant holders which could act as a potential sample frame for future evaluations, enabling a clearer picture of these respective populations and more representative sampling.