Scottish National Investment Bank: Fair Work direction - letter from the Cabinet Secretary for Finance and the Economy

A letter from the Cabinet Secretary for Finance and the Economy, Kate Forbes MSP, to the Scottish National Investment Bank issuing a Fair Work Direction as required by the Act which established the Bank.

Fair Work Direction under section 23 of the Scottish National Investment Bank Act 2020

I am writing regarding the requirement to issue this Fair Work Direction to the Bank. I am grateful for the Bank’s support in developing the Direction, set out in Annex A to this letter.

Fair Work First and the principles and criteria are relevant for all employers; as with other Scottish Government policy any change to these would be informed by consultation with a range of stakeholders, including the Bank.

Scottish Ministers established the Bank with the key aim of making a contribution to addressing key societal challenges through its mission-led approach to investment, and shaping Scotland’s future markets while delivering environmental, societal and economic returns.

Our vision is for Scotland to be a leading Fair Work Nation by 2025 and the Bank has an important role in helping to achieve this. I firmly believe that a commitment to Fair Work for employees of the Bank, as well as for promoting and supporting Fair Work principles within businesses that the Bank works with and invests in, must be at the heart of this. These principles underpin and enhance the work of the Bank, both as an employer  and a lender, and can support it to put Fair Work and sustainability at the core of its functions.

Your current Letter of Guidance includes that the Bank will contribute to delivery of Scotland’s Fair Work Action Plan; this Direction further affirms that expectation.

I understand that the Bank is doing much already  to embed Fair Work within  its own practices and is looking at how to take forward and implement Fair Work principles when working with and investing with others. The Bank’s commitment to Fair Work and the priority you are already giving to it is very welcome.

Both the Bank and other respondents have observed that how this Direction is implemented and how Fair Work First criteria and principles are applied is crucial. Should the current Fair Work criteria be altered subsequent to this Direction, it would be for the Bank’s Board to implement these as appropriate. I look  to you  to engage  with the Shareholder  on what will be tracked in relation to Fair Work and how it will be reported on by the Bank.

It is important that businesses are not restricted or prevented from accessing crucial investment from the Bank and we recognise that some SMEs in particular are likely to take some time to fully adopt the Fair Work First criteria. For this reason the application of the Fair Work First criteria should be proportionate and relevant, not putting them at a disadvantage in terms of access to investment.

The Fair Work Convention – the independent body which advises the Scottish Government on Fair Work – is keen to engage further with the Bank about this and I encourage you to include bodies like this in your implementation planning. Their insight and knowledge will undoubtedly be valuable to you.

Whilst the Direction does not place a requirement on the Bank to recognise or promote the recognition of trade unions, it is critical that employees have an effective voice in the workplace. This is why Fair Work First places a commitment on the Bank to adopt and promote appropriate effective voice channels which are reflective of the unique circumstances of individual business.

Similarly, whilst there is a presumption against the use of zero hours contracts by both the Bank and those it invests in, there may be exceptional circumstances where zero hours contracts might be appropriate and where it could be important to invest. If a business uses zero hours contracts they should have a clear and credible rationale for doing so and should be prepared to commit to providing secure employment contracts wherever possible.

My thanks to you once again for engaging in the development of the Fair Work Direction. Please also pass my thanks on to the Board for their commitment to Fair Work and I hope that the Direction and this letter are helpful as the Bank develops its approach to implementation.

I look forward to progress reports and would ask that you keep the Shareholder team updated about the Banks plans as well as discuss with them your future reporting arrangements.

Yours sincerely

Kate Forbes

Annex A

Fair Work Direction

This Fair Work Direction has been developed in consultation with the Scottish National Investment Bank (the Bank) and organisations who represent the interests of employees and employers in Scotland.

The Bank should act in accordance with the ambitions and expectations of Scottish Ministers in delivering Fair Work, as set out in the Scottish Government’s Fair Work Action Plan. The Bank should seek to promote Fair Work in all of its functions  as Scotland’s  development bank. It should be embedded in the policies  and practices of the organisation,  driving  a culture of high quality and fair work, in line with Fair Work principles.

This means that the Bank should apply the Scottish Government’s Fair Work First approach. As this policy evolves, the Bank will be consulted on any proposed changes and will seek to adopt any new or amended Fair Work First criteria.

Ministers have made clear their expectation that those in receipt of public funding will be supported to embed fair working practices in their organisations , including Fair Work First Guidance.

The Bank is expected to apply the Fair Work First approach:

  • in its role as an employer, by ensuring all of its workers experience fair work; and
  • in the award of investments and contracts to support the embedding of fair work practice across the Bank’s clients and customers.

In support of this Direction, Ministers may provide further guidance on the Scottish Government’s Fair Work priorities, and their expectations of the Bank. The Bank will be required to report on its progress in adopting and promoting the Fair Work First criteria to the Scottish Government.

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