Fair work practices and the award of public contracts : statutory guidance

Guidance to help public bodies evaluate fair work practices, including the Living Wage, when selecting tenderers and awarding contracts.

Living Wage

17. Section 15 of the Act introduces a requirement for a contracting authority which estimates that the value of its regulated contracts in a year will be equal or greater to £5,000,000 to prepare a procurement strategy. That strategy must include a statement of the authority's general policy on the payment of a living wage to persons involved in producing, providing or constructing the subject matter of its regulated procurements.

18. 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. It is also important to take account of developing case law decisions on this matter. There have been a number of rulings of the Court of Justice of the European Union, including the most recent ruling at the time of the preparation of his guidance; Bundesdruckerei v Stadt Dortmund (C549/13), which reinforces this position. It is, therefore, not possible to reserve any element of the overall tender score specifically to the payment of the Living Wage.

19. It is possible, however, where relevant to the delivery of a contract, to take account of a bidder's approach to fair work practices. Fair work practices can and would normally be expected to include fair and equal pay, including the Living Wage as part of a package of positive fair work practices to be delivered for the duration of the contract. Payment of the Living Wage is not the only indicator however, and it should be emphasised that whilst failure to pay the Living Wage would be a strong negative indicator it does not mean that the employer's approach automatically fails to meet fair work standards.


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