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.

Evaluating fair work practices in public contracts

20. Section 9 of the Act places a sustainable procurement duty on a contracting authority before carrying out a regulated procurement, to consider how in conducting the procurement process it can improve the economic, social, and environmental wellbeing of the authority's area. Wellbeing of the authority's area includes, in particular, reducing inequality in the area. A contracting authority can contribute towards improving the social wellbeing element of its sustainable procurement duty by adopting a policy to promote fair work practices in relevant public contracts.

21. A contracting authority must consider, before undertaking a procurement exercise, whether it is relevant and proportionate to include a question on fair work practices, which would be evaluated along with other relevant criteria, while ensuring the appropriate balance between quality and cost of the contract.

22. Any decision to include a question on fair work practices should be made on a case by case basis taking into account commitments set out in the contracting authority's procurement strategy. The question should be framed in a way that is consistent with the principles deriving from the Treaty on the Functioning of the European Union: transparent, ensures equal treatment and non-discrimination, proportionate and mutual recognition and selection and award criteria must be relevant to the subject matter of the contract.

23. The question should ask bidders to describe the package of measures which demonstrate their positive approach to fair work practices in delivering the public contract. We regard a commitment to the Living Wage as one of the clearest ways in which a bidder can demonstrate this positive approach. 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.

24. A sample question in Annex A is how we recommend purchasers address fair work practices at the relevant stage of the procurement procedures, but this may need to be adapted to take account of the particular circumstances surrounding the goods, works or services being procured and to reflect those aspects of fair work practices which are relevant to the subject matter of the contract.

25. When considering the use of a question on fair work practices, it is important to consider the extent to which a bidder's fair work practices is related to the subject matter of the contract. The following factors should also be considered when devising the approach to the procurement process:

In respect of public contracts for services and works:

  • Fair work practices will be particularly relevant to consider where the quality of the service being delivered or works performed is directly affected by the quality of the workforce engaged in the contract. For example, the continuity and quality of care and support services are likely to be closely related to the contractor's approach to its workforce in respect of matters relating to recruitment, remuneration and other terms of engagement;
  • When weighting the fair work practices question, it is important to be proportionate by taking into account the likely impact on the quality of the service delivery or the works performed and by ensuring the appropriate balance between the quality and cost of the contract;
  • When evaluating bidders' responses it is important to take into account those aspects of fair work practices which are likely to have a positive impact on the service delivery in that sector and the comprehensiveness and quality of the complete package of measures in general;
  • It is also important to ensure that the evaluation is conducted in a proportionate, objective, transparent and non-discriminatory manner in recognition that responses may describe different approaches to fair work practices depending on the size and status of the bidders.

In respect of public contracts for the supply of goods:

  • Fair work practices are less likely to be a significant consideration in respect of the procurement of goods, where the weighting of quality criteria will primarily focus on the quality and performance of the goods being supplied;
  • Fair work practices should, however, be considered wherever the way the workforce are engaged in the supply of the goods will have an impact on their quality. For example, where the goods to be supplied are created by processes involving manual labour where the terms of engagement will impact on the quality of the goods.

26. In deciding whether or not fair work practices are relevant to the quality delivered under a contract, it is important to consider all relevant factors and be able to justify their inclusion in any decision making process. These factors may include whether:

  • there is any previous experience of poor work practices, including pay and conditions, impacting on the quality of the contract to be delivered;
  • there is any history of low pay or unequal pay in that sector;
  • there is a risk that staff working on the contract might be subject to exploitative practices, e.g. through the inappropriate use of zero-hours contracts, through unnecessary distancing of the employer-worker relationship e.g. by use of an "umbrella company" and through pay and hours arrangements that deny workers stability of employment or hours of work, e.g. by failing to pay wages for travel time within the working day, such as in the care at home sector;
  • there is evidence that working conditions are making recruitment and retention problematic;
  • contractors are seeking to cut their costs through driving down staff terms and conditions, including pay;
  • workers will be required to interact directly with the contracting authority's employees and/or members of the public and whether they will spend any time on the contracting authority's premises.

27. If the answer to any of the above questions is "yes", then fair work practices are likely to be a relevant consideration for the contract in question. This is not, though, an exhaustive list and other factors may be relevant depending on the specifics of an individual contract.


Back to top