Be prepared to meet Fair Work First criteria - Suzanne Hardie

But what does this mean for those receiving public sector funding?

Many smaller organisations rely on public funding to operate, or to carry out one off projects. To be awarded a grant, they need to show that they are meeting the mandatory Fair Work First criteria as a minimum.

Fair Work is encouraged by the Scottish Government to deliver benefits to workers and to help organisations grow and prosper in a high value society.

The first requirement requires organisations to pay the real Living Wage. This requirement extends beyond those directly employed by the organisation to any sub-contractors or agency workers helping to deliver the grant funded activity.

The second requirement – to provide employees with ‘effective voice’ channels – is designed to give the grant recipient's workers (including agency staff) a safe environment where their views are sought out, listened to and can make a difference.

Those with fewer than 21 employees are not required to demonstrate collective voice, such as through a trade union. However, they must prove the authenticity and effectiveness of individual voice channels.

Organisations may also be required to demonstrate plans for meeting other Fair Work First criteria, such as implementing flexible working practices and addressing the gender pay gap. Grant offers may include milestones for meeting additional criteria.

At the moment, agricultural grants are excluded from the mandatory criteria. However, the intention is to extend the criteria to the agricultural sector from 1 April 2024. To avoid disruption to funding, organisations within this sector should keep up to date with guidance and implement any required changes ahead of time.

What changes do businesses need to implement?

To guarantee successful funding, organisations must be prepared before submitting funding applications.

For example, the Living Wage requirement filters through the supply chain, so organisations should not only consider their own employee terms (and consider accreditation through Living Wage Scotland), but also agency worker and other contracting arrangements. This should include a requirement on contractors to pay the real Living Wage and to pass on the obligations through their supply chains.

If any additional Fair Work milestones have been included in the grant contract, then organisations should be sure to actively monitor progress. Failure to comply may lead to recovery of the grant.

It is clear that Fair Work practices remain at the centre of government funding decisions and are being used to drive improvements to the labour market. Organisations seeking grant funding should therefore keep up to date with the latest guidance to ensure that they are well prepared before they apply.

Suzanne Hardie, Partner in the Public Sector team at Morton Fraser MacRoberts.