2. Creating Change

The terms of reference for the Inquiry identified the procurement relationship as the main lever for the public sector to create or support change in the industry. The CIIG considered procurement in detail, undertaking two dedicated evidence gathering sessions and commissioning a mapping exercise to explore the practice carried out by contracting authorities and its real world impact. The CIIG also considered the impact of Brexit on the underpinning legislation and the scope that now exists for more stretching practice within procurement, taking specific legal advice on these questions. Section 4.1 considers current practice on fair work in procurement and how this can be strengthened. This section focuses on contractual mechanisms that place obligations on contractors which can be monitored and enforced by the contracting authority.

The CIIG also identified that in addition to procurement the public sector, and the Scottish Government in particular, can also facilitate change through voluntary measures encouraging and supporting improved relations and collegiate working within the industry. The fair work approach encourages social dialogue, voluntary agreement and the application of effective voice mechanisms, including collective bargaining agreements. Section 4.2 considers how these can be strengthened and how voluntary agreements between unions and employers, encouraged and supported through public sector practice can also make meaningful change in the industry.

The CIIG believes that both mandatory and voluntary mechanisms will be necessary to create change in the construction industry and that each approach can and should support and reinforce the other.

2.1 Procurement

2.1.1 The Importance of Procurement

The construction industry in Scotland is worth around £7 billion. The public sector is a significant customer with an annual spend of more than £4 billion on building or civil engineering works.[92] How public procurement is undertaken has the potential to impact the nature and the shape of the industry by incentivising or mandating fair work outcomes, supporting skills and maintaining standards. It is therefore a key tool to support fair work outcomes.

The role and importance of procurement is well recognised. In 2018 Construction Scotland published a strategy for the construction industry. Within this they point to the central role that procurement policy can play in shifting the approach of the industry.

‘Our vision for the industry is that, by improving the way we do business together, we become better equipped to respond to future demands efficiently and effectively. To achieve this transformation will, we believe, require a major shift in procurement approaches, towards long-term and collaborative relationships at all levels of the supply chain and ending the drive to lowest tender price. Such a change will enable all industry participants to have the resources (of information, time, skilled people, cashflow, tools and supply chain) to consistently deliver urgently required infrastructure to the required quality, on programme and within budget, whilst paying all its suppliers on time and its people appropriately. It will better enable the industry to make a reasonable return, appropriate to the risk of the work undertaken, and thus allow it to remain resilient and to invest in innovation and new technology, (including the digitisation of construction processes, modern methods of construction and offsite fabrication), whilst still being able to look after and maintain the fabric of our predominantly traditional building and infrastructure assets.’ [93]

The focus on ‘collaborative relationships’ and ‘ending lowest price tendering’ speaks to a core issue within the construction industry, many of the fair work issues identified in the previous chapter flow from the perception amongst contractors that they must reduce costs to facilitate low price tendering. The problems associated with this approach are well recognised with highly aggressive tendering causing not only a lack of investment in the workforce through outsourcing and the creation of complex employment relationships, but also a push down on building standards and an increase in other problematic practices for the supply chain like late payments or contract disputes. In this way price reductions have been achieved through price cutting rather than cost reduction.[94] The need to consistently win tenders in order to maintain cash flow and keep the business afloat drives a culture of lowest price tendering or even ‘suicide bids’ – where the contractor bids below the cost of the work – in an ultimately self-defeating cycle.

Evidence given to the 2019 Scottish Parliament Inquiry by Bruce Dickson, BAM Ltd on the collapse of Carillion, underlines both the structural weaknesses within this approach and the need for reform within procurement that despite multiple reviews continues to present challenges for the industry:

‘We have learned absolutely nothing from Carillion. It is interesting that you mentioned the procurement review, because I sat on the consultation committee from 2013. I then chaired the implementation group for industry, working with the Scottish Government and Scottish Futures Trust for another two years, and nothing changed. In relation to Carillion, I have spent probably the past 10 years waiting for a major UK contractor to go bust, to prove that the model is broken.’[95]

Yet action has already been taken to prevent the award of contracts on the basis of lowest-price tendering and contracts in Scotland cannot be awarded on the basis of price alone. Significant steps have also been taken to identify abnormally low tenders and to ensure that contracts are not awarded on this basis. These issues were given significant focus in previous reviews along with the issue of late payment and support for smaller contractors within the supply chain.

Despite this, the view of the industry continues to be that most contracts are awarded primarily on price which incentivises a focus on lowest-price bids and aggressive competition between construction companies. The need to encourage more positive and collaborative relationships within the industry is well recognised and while business models are undoubtedly driven by decisions made within contractors, it is important to consider how procurement practices can be further enhanced to support and incentivise positive practice in the industry.

2.1.2 Current Statutory Requirements and Guidance Underpinning Fair Work in Procurement

The current framework for public procurement in Scotland is laid out in a range of key legislation including the Public Contracts Regulations 2015 (the 2015 Regulations); the Utilities Contracts (Scotland) Regulations 2016; the Concessions Contracts (Scotland) Regulations 2016; the Procurement Reform (Scotland) Act 2014 (the 2014 Act) and; the Procurement (Scotland) Regulations 2016.

The 2015 Regulations at Regulation 19[96] sets out the core underlying principles of procurement: equal treatment, non-discrimination, transparency and proportionality. These core principles are important when considering the scope for expanding fair work provisions within procurement. Another key principle at Regulation 67[97] provides that the award of public contracts by a contracting authority must be based on the most economically advantageous tender (MEAT) assessed from the point of view of the contracting authority; and cannot be awarded on price or cost alone.

Regulation 19 also states that:

‘A contracting authority must include in each public contract or framework agreement such conditions relating to the performance of the contract or framework as meet the requirements mentioned in paragraph (5) and are reasonably necessary to ensure that the economic operator complies with environmental, social and employment law, including any relevant collective agreements.’

While Regulation 70[98] builds on this and makes clear that a contracting authority may lay down special conditions relating to the performance of a contract, provided that they are linked to the subject-matter of the contract, and provided that they are indicated in the call for competition or in the procurement documents and specifically sets out that those conditions may include ‘social or employment-related’ considerations.

The 2014 Act also sets out obligations to:

This legislation is then supported by a range of key guidance including:

Updated Statutory Guidance

This statutory guidance was originally published on 17 March 2016. It was updated in June 2021 to reflect changes that have occurred as a result of Brexit. A link to the Statutory Guidance on Fair Work is provided within the introduction to this document and the guidance gives a clear overview of how contracting authorities should apply fair work criteria. It then goes on to give further guidance on the Sustainable Procurement Duty at Chapter 3[101], setting out how contracting authorities can seek to ensure procurements improve economic and social wellbeing. The commentary on wellbeing includes a reference to the availability of suitable and high quality jobs, but there is no link made to the Statutory Guidance on Fair Work within this section.

Chapter 4[102] sets out guidance on community benefit clauses which includes issues on training, skills and apprenticeships, yet it does not make clear how this might relate to wider requirements around fair work. Equally at Chapter 5[103] it sets out the basis of mandatory and discretionary exclusions, noting that blacklisting is a requirement for mandatory exclusion and breach of economic and labour laws are grounds for discretionary exclusion, where the contractor cannot show effective remedial action has already been taken.

In this regard there are several provisions that could be relied upon to advance fair work and a number of ways for these to be included within procurement contracts.

Statutory Fair Work Guidance

In October 2015, the Scottish Government published its Statutory Fair Work Guidance on addressing fair work practices in procurement. All public bodies must have due regard to this short guidance document.

The guidance requires Contracting Authorities to evaluate fair work as part of the procurement exercise where it is relevant to the quality of service or goods or the delivery or performance of the contract. Contracting authorities are directed to consider both the workforce that will perform the contract and the sub-contracting chain. The statutory guidance also offers some examples of when fair work practices are likely to be relevant including when any one of the following criteria apply:

Given the number of these criteria that directly relate to the construction workforce, the guidance sets a clear expectation that fair work criteria be included within the procurement of construction contracts and this Inquiry found that most contracting authorities were regularly including fair work questions within their construction procurements.

The guidance makes a range of references to what constitutes fair work practice, throughout the document and includes elements that would be highly relevant within the construction industry, including the encouragement of direct employment and discouragement of the inappropriate use of umbrella companies, the need for access to trade unions, respect for collective bargaining agreements and the need for effective voice. It also requires that where contracting authorities have to prepare a procurement strategy that they must include a statement on ‘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’.[105]

The Statutory Fair Work Guidance also emphasises the need to adhere to employment law and all relevant collective agreements:

‘International labour standards, set both by the European Union and the International Labour Organisation, should be respected by those who deliver public contracts, including sub-contractors. They should be able to demonstrate that they are good employers who have adopted policies which comply with relevant employment, equality and health and safety law, human rights standards and adhere to relevant collective agreements, and describe how they adopt fair work practices for all workers engaged on delivering the contract.’[106]

While this guidance is statutory, and therefore compulsory, it does not require specific fair work questions to be asked; instead it requires contracting authorities to give consideration to fair work on a case-by-case basis proportionate to and consistent with the context of the contract. Contracting authorities are not required to ask about, or specify, payment of the living wage and the guidance says, ‘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.’

The guidance is clear that follow-up and monitoring work is required:

‘Effective contract management and monitoring should be undertaken to ensure that fair work practices continue to be applied throughout the duration of the contract, e.g. by requesting information on the pay, terms and conditions of workers involved in the delivery of the contract.’[107]

At Annex A the guidance includes a template question to ask on fair work. It outlines a range of elements that represent fair work practices. These include:

The sample question below is also included:

Fair Work Practices (xx%)

‘Q - Please describe how you will commit to fair work practices for workers (including any agency or sub-contractor workers) engaged in the delivery of this contract.)’

The Best Practice Guidance

In July 2018 the Scottish Government published Best Practice Guidance on addressing fair work in procurement. This is not compulsory and is designed to help public bodies in following the Statutory Guidance in practice, stating, ‘The Scottish Government strongly believes that all public bodies should be exemplars of Fair Work and that they should be able to demonstrate practices which cover each of the five dimensions of the Fair Work Framework.’[109]

The Best Practice Guidance gives a route-map for contracting authorities to enable them to ensure they are taking into account all of the issues required in the Statutory Guidance, in a way that best contributes to outcomes sought by the Scottish Government, explaining each of the steps in the process and how to give due consideration to fair work. The Best Practice Guidance makes no reference to collective agreements but notes that breaches of employment law are discretionary exclusion grounds while blacklisting is a mandatory exclusion ground.

Alongside this there is a Fair Work Practices in Procurement toolkit made up of information sheets, checklists, flowcharts and examples to assist public bodies in including a Fair Work practices criterion in their contracts.[110]

Fair Work First Guidance

In September 2021 the Scottish Government issued a new Scottish Procurement Policy Note (SPPN) on Fair Work First.[111] Fair Work First asks businesses bidding for a public contract to commit to adopting the following:

Annex A of this Guidance gives detailed examples of what each of these criteria mean and also proposes an updated fair work question:

Fair Work First (xx%)

‘Q - Please describe and demonstrate how you will commit to adopting Fair Work First for workers (including any agency or sub-contractor workers) engaged in the delivery of this contract. This should include current and planned actions that show how you will embed these practices during the lifetime of this contract. Answers should include tangible and measurable examples and should also describe how you will report on, and demonstrate progress, to the contracting authority during the lifetime of the contract.’

‘Good answers will reassure evaluators that your company is committed to adopting Fair Work First and to progressing towards wider fair work practices set out in the Fair Work Framework for the workers engaged in the delivery of this contract and those in the supply chain working on this contract.’[112]

This guidance supersedes the guidance and the question at Annex A in the Statutory Fair Work Guidance cited above. It also introduces a requirement for organisations delivering public contracts where Fair Work First has been applied to include a short statement on their own website highlighting their commitment to advancing the Fair Work First criteria. The statement should be agreed jointly by the employer and an appropriate workplace representative which should be from the relevant trade union where one is present, or workers representative(s) where there is no union present.

This policy note also states that the statutory guidance and Statutory Fair Work Guidance and Best Practice Guidance and accompanying toolkit are in the process of being updated to include Fair Work First.

Construction Procurement Handbook

The Scottish Government’s Construction Procurement Handbook makes reference to the sustainable procurement duty and links the associated guidance and while there is still an expectation to apply fair work in construction procurement, there is no reference to fair work within the handbook itself. The handbook provides detailed worked through guidance on how contracting authorities should calculate both price and quality scores, making the absence of advice on fair work weightings and other community benefit clauses notable. It also, at Appendix B, provides guidance on discretionary and mandatory exclusion grounds within contracts and notes that a ‘breach of environmental, social and labour laws’ is grounds for discretionary exclusion.[113] In the course of this Inquiry, the Scottish Government has indicated that a specific chapter on fair work will be added to this guidance.

Scottish Public Procurement Notes

Further guidance is issued to contracting authorities through Scottish Public Procurement Notes (SPPNs)[114], which are sent ad hoc on specific issues. Recent policy notes have been issued on Fair Work First. There are also Construction Policy Procurement Notes[115] which, to date, have not looked at specific fair work issues but which have considered issues related to fair work such as sustainable tendering, dispute resolution (with regard to contractual dispute between suppliers) and quality assurance and workmanship in light of staffing and material shortages, and which includes guidance on the role and appointment of clerk of works.

2.1.3 Fair Work Procurement Practice Across the Public Sector

There is significant guidance for contracting authorities on fair work and there are a range of approaches that can be used to build fair work into contracts. The CIIG commissioned a mapping exercise to explore in detail the practice carried out by contracting authorities with regard to fair work scoring within procurements, either at contract or at framework stage, and its real world impact. It should be noted that at the time of the Inquiry Fair Work First guidance had not yet been published. For this reason the Inquiry has collected evidence on the implementation of fair work using the Statutory Fair Work Guidance, the Best Practice Guidance and Toolkit as it is outlined above.

Mapping Fair Work in Construction Procurement

Eight contracting authorities responded to our questionnaire about their practices for including fair work questions and conditions in their construction procurement, and how these are handled. While this only represents a small number of contracting authorities, it covers central government, local government, NHS, government agencies and higher education. Together the respondents were responsible for about £1.5 billion of public sector spend.

The exercise looked at four stages of construction procurement:

Key Findings

There was considerable variation in approaches across the public sector. The weighting of fair work questions across respondents ranged from 2% to 15% of the total contract with most contractors scoring around 5%. In the wording of their fair work questions some stayed quite close to the template provided in the Statutory Fair Work Guidance, while others deviated substantially from it. Some placed greater emphasis on the framework stage while others focused more on the tendering stage. Some asked specific and detailed questions about fair work, which gave a clear indication to potential contractors of the types of activities sought, while others simply asked contractors to state what they did about fair work. Some included a scoring matrix that explained specifically how fair work actions would be scored, while others used a matrix generic to all questions.

There were no obvious patterns to these variations. Contracting authorities who had taken a light-touch on one aspect were often more forthright on others. As a result, it is difficult to avoid the conclusion that the differences in approach were mostly due to local circumstances and personnel within each organisation, and that no consistent approach has been developed. There may be sound operational justifications across and within contacting authorities for these differences and the guidance allows, and indeed demands, local consideration of relevance and proportionality. However, there does not appear to be variance in construction work of a scale and nature to explain the variation in approaches taken by contracting authorities and a more consistent approach could lead to better fair work outcomes.

It should also be noted that contracting authorities use a range of framework agreements in order to deliver procurements. Where frameworks originate from outside Scotland, for example, the Crown Estate, fair work obligations will not be built in at framework stage which limits the scope for fair work elements to be applied. This adds to the complexity of the picture and creates a level of variation in procurement approaches even within a single contracting authority.

The Real Living Wage, Collective Bargaining and Other Aspects of Fair Work

There was no consistent approach to fair work across the respondents. Some contracting authorities reported having champions for procurement, fair work, real living wage or other aspects such as modern slavery; others reported having specific policies, their own Construction Charter or having signed up to a general Construction Charter. Some had no internal promotion of fair work, while Transport Scotland reported that it had recently appointed someone with a role to embed fair work.

It was notable that there was a strong emphasis placed on the Real Living Wage (RLW) by both contracting authorities and the Scottish Government. This was as much a consequence of what was monitored centrally and it was clear that contracting authorities were also covering other elements within their fair work assessments.

Yet it was also noted by the CIIG that the focus on the real living wage in construction as the key fair work focus was unhelpful. In the context of construction the RLW tends to represent a pay rate that is lower than collectively agreed rates and most workers already earn above it. Therefore a focus on the living wage alone is not sufficient to deal with the range of fair work issues that exist in construction and a focus on the payment of collectively agreed rates would be more appropriate. Despite the existence of a number of collective agreements in the industry which set expectations around terms and conditions, working conditions and dispute resolution, these were not prominent in procurement as a method to improve standards and outcomes for people working in the construction industry.

Contracting Management and Audit

The CIIG noted that while a great deal of effort was placed on including fair work requirements within documentation (and to consider this at award stage), there was little understanding of what might constitute a genuine and stretching commitment to fair work on the part of the contractor. There was also little information collected on whether requirements went beyond Tier 1 contractors and further into the supply chain where the majority of people work. In this respect training for contract managers and commissioners rooted in the specific context of the construction industry is essential. There may also be merit in providing short supplementary guidance to the Best Practice Guidance which outlines specific examples for the construction industry.

The mapping study also showed that there was a wide range of practice in respect of monitoring or auditing contractors’ responses. NHS National Services Scotland had a number of fair work related key performance indicators (KPIs) for contractors on the Framework Agreements which were monitored across the lifetime of contracts. At the other end, some contracting authorities reported that they did not actively monitor the implementation of fair work at all.

It was notable that KPIs were more likely to be applied to actions taken under community benefit clauses rather than the specific fair work elements of the guidance, and were therefore more likely to relate to requirements around apprenticeships and training. This is likely to reflect that community benefit clauses are a more established mechanism and therefore more embedded into the contracting authority’s approach. Clearer connections within the guidance between fair work, the sustainable procurement duty, community benefits and discretionary and mandatory exclusions would be useful to ensure commissioners and contract managers are clear about all the ways in which they can advance fair work within procurements and this may promote a more consistent approach to monitoring or audit. The CIIG noted that where outcomes were specified as mandatory conditions within contracts and where monitoring took place, meaningful impact was felt at the workplace level.

Quality v Cost

The Inquiry heard evidence of a widespread policy debate around altering the balance between quality and cost in construction procurement. In this context ‘quality’ means all non-cost aspects of the contract, including build quality, sustainability, community benefits and fair work. Until very recently common practice had been to weight contracts with a higher price than quality rating (usually around 30% quality and 70% price). The Inquiry heard evidence that there was a desire, particularly from industry, to change the balance in this area and have tenders which are assessed more heavily on quality (70%) than on price (30%). It should be noted that the quality / price ratio is entirely at the discretion of the contracting authority and the NHS already makes use of 70% quality ratings.

The Scottish Government has considered this issue and is proposing a move to 70% quality and 30% price ratings within a new civil engineering framework agreement. This approach is welcome and offers an opportunity to build high quality fair work requirements into the framework agreement at the outset which would support contracting authorities to deliver meaningful fair work outcomes through their procurements.

2.1.4 Further Embedding Fair Work Requirements in a Post-Brexit Context

The CIIG was keen to understand the options available to further embed standards within contracts particularly given the post-Brexit context. Prior to the UK's withdrawal from the EU the Posted Workers Directive (the PWD) placed a broad prohibition on requiring rates of pay above legally enforceable minimums. Whilst bidders were permitted to voluntarily pay wages that exceeded the statutory minimum wage, it was not permitted for contracting authorities to compel bidders to pay a living wage that was not prescribed in legislation or by collective agreement.

However, the PWD is no longer applicable in the United Kingdom and has not been replicated in any of the international obligations that apply to the procurement regime between the UK and EU Member States. So while procurement conditions must still comply with the requirements regarding equal treatment and therefore must still be connected to the subject matter of the contract, proportionate and transparently stated in the procurement documents, there is now nothing in the international agreements which would prevent contracting authorities from requiring bidders to include fair work conditions such as the payment of a real living wage in excess of a statutory minimum wage.

In light of this, the Scottish Government has now announced that companies bidding to win Scottish Government contracts will have to pay the real living wage.[116] It is still the case that procurement tenders will have to comply with the core principles cited above of equal treatment, non-discrimination, transparency and proportionality but it is now possible to require the specific wage rates as a condition of contract. This change will require updated guidance, particularly the statutory fair work guidance to reflect the change in the law.

There has long been an ability to mandate the use of collective agreements as noted in the 2015 regulations. However, European case law in this area was clear that where the obligation to pay wages was by reference to a collective agreement which related to only a part of a sector (for example, if it only applied to part of the construction industry), then the collective agreement would not fall within the scope of what was possible under the PWD, as it was not considered universally applicable. Given the structure of collective agreements in the UK, this had a significant limiting impact and may explain why contracting authorities have not considered making use of the provision within the 2015 regulations within construction to date.

However, the PWD no longer applies post-Brexit and the CIIG has taken legal advice which suggests that it is now permissible for contracting authorities to require wage conditions that align to collective agreements even if the collective agreement only relates to part of a specific sector. In this way contracting authorities can require payment of collectively agreed rates (subject to the overarching requirement for such conditions to remain proportionate and relevant to the subject matter of the contract) – for example, collectively agreed wage conditions for electricians could be required in a contract for electrical repairs/installations, but could not be applied to a gas servicing contract.

When considering the issue of proportionality the Polish case II GSK 1127/15 while no longer binding, gives a useful and persuasive steer:

‘A contracting authority may specify certain standards as long as they do not restrict fair competition. This means that it must be feasible for an average economic operator to meet those standards.’[117]

Thus proposing industry-recognised standards which are already adopted by a high proportion of contractors within the industry would be proportionate. As 62% of employed workers in construction are likely to receive collectively agreed rates or higher[118], it is feasible for the average economic operator to meet this standard.

Construction contracts are often entered into using industry standard form contracts (e.g. SBCC contracts, PPC 2000, NEC, etc.). Many procurements will stipulate the form of contract that will be entered into with the contractor(s). It would seem a useful approach for contracting authorities to use a standard form contract, and bespoke drafting in the schedule of amendments to the standard form building contract would fully incorporate any wage conditions in the contract. That is to say, it would make it an express term of the main contract that the contractor, and any sub-contractors, comply with the conditions relating to wages, whether that be living wage or collectively bargained wages. Such a schedule of amendments can form part of the procurement documentation, ensuring transparency of the condition as it will apply to any contractor and sub-contractor during the procurement process.

Imposing a wage condition does not prevent a contracting authority also asking for information about a bidder’s wider fair work practices, in the manner already articulated in detail in the Statutory Fair Work Guidance.

A discretionary exclusion ground also exists when an economic operator has breached its obligations in regard to labour laws. It would be useful for the guidance to highlight the value of this where any wage or employment conditions are intended to be a condition of the contract, as in this context it would be important to understand contractors’ and sub-contractors’ past history in this regard and would support effective monitoring of provisions over time.

Effective contract management and monitoring are essential and should be undertaken to ensure that fair work practices are applied throughout the duration of the contract. In order to have significant real world impact it is important that these approaches also reach down into the supply chain where most people work.

Case Study - HS2 Ltd and TUC Agreement Facilitating Union Access to Workplaces

In September 2021, Unite the Union secured an access agreement with the joint venture company ‘Align’ (comprising Bouygues, Travaux Publics, Sir Robert McAlpine and Volker Fitzpatrick) which is responsible for the tunnelling and track laying on the section of HS2 from the north of London and through the Chiltern Hills. A similar agreement had already been made between the unions Unite and GMB and the Mace/Dragados joint venture company which is undertaking the construction of the new Euston Station as part of HS2.

Access agreements secure the right of trade union representatives to:

Ultimately this aims to allow a union to support workers with any concerns, to support effective voice and to ensure resolution is achieved.

These access agreements were supported and facilitated by an ‘Initial Framework Agreement’ signed in 2016 between HS2 Ltd (a non-departmental public body wholly funded by the Secretary of State for Transport and sponsored by the department of transport) and the Trades Union Congress (TUC), which aimed to ‘set the environment for subsequent work package agreements, to be agreed directly between the appropriate unions and contractors, with the support of HS2 Ltd and the TUC’.

The IFA was intended to create the high-level mechanism to discuss strategic issues including employment, union access, apprenticeships, staff training and development, equality, diversity and inclusion, health, safety and wellbeing, and payment of the real living wage. Not all of the contractors have enabled meaningful engagement with the unions. However, the agreement also supports positive and visible relations between employers and unions and has led to access agreements in some cases.

Source: UK Government (2016), High Speed Two Limited and the Trades Union Congress Initial Framework Agreement (IFA)

This case study shows that it is possible to encourage more positive relations and to actively and meaningfully support effective voice through trade union access on sites. This is particularly important as it creates visible examples of large companies working constructively with unions and provides support for the workforce to access their rights. The role of the public sector in laying the foundation for these agreements and facilitating and encouraging their use is notable with the overarching agreement between HS2 Ltd and the TUC being the catalyst for improved relations. Building trade union access into procurement complements wider monitoring systems in the procurement contract and supports tangible implementation of fair work, encouraging consistent standards across workplaces.

The Inquiry observed that many contracting authorities have also signed up to and used Fair Work Charters to promote and support fair work outcomes. This approach seems positive, particularly where charters have been negotiated and agreed by trade unions and support trade union access. It was notable that there were several different charters available and currently used within procurement and the CIIG saw potential benefits in a single charter creating consistency of approach and expectation across all contracts.

The Scottish Government should facilitate employers and unions to agree a single Fair Work Charter which could be achieved through current industry leadership group or forum structures. Once developed the single Fair Work Charter should then be used as a pass/fail condition within all construction procurement exercises in Scotland to ensure appropriate fair work standards are applied throughout the supply chain. Fundamentally there is a need for fair work to be implemented throughout the supply chain and a strong desire for mechanisms that are consistently applied and create a level playing field for contractors. A clear and consistent message of what fair work entails in construction that is known, consistently upheld and effectively monitored will help to drive consistent standards and behaviours which overtime become embedded as sectoral norms.

2.1.5 Recommendations Related to Procurement

How public procurement is undertaken has the potential to impact the nature and the shape of the industry by incentivising or mandating fair work outcomes, supporting skills and maintaining standards. It is a key tool for driving better outcomes given that public procurement represents around 50% of all construction spend[119] in Scotland. Significant action has already been taken to build fair work criteria into contracts but approaches vary. The Inquiry found that:

The Inquiry Group makes the following recommendations:

Procurement

Recommendation 1

All contracting authorities should seek to maximise quality weightings and fair work criteria should be given a robust weighting within the quality dimension. Fair work weightings should not be lower than 10% of the contract and it must be possible for low scores on fair work to impact whether a tender is won or lost.

Owner

All Contracting Authorities

Timeframe

Within each tender and reviewing frameworks as they arise

Recommendation 2

Training in fair work should be mandatory for all project commissioners and managers overseeing construction contracts. Training should be provided by those who have demonstrable expertise on fair work and support an understanding of what constitutes positive and stretching fair work commitments by contractors.

Owner

All Contracting Authorities

Timeframe

All staff should be trained by Jan 2024.

Recommendation 3

Guidance should be reviewed to ensure it supports the use of collectively bargained rates within procurement contracts and short best practice guidance should be developed for construction procurement that highlights positive examples of fair work practice in the construction industry. Current wording around avoiding the use of umbrella companies should be retained.

Owner

The Scottish Government

Timeframe

As soon as possible and before Dec 2022

Recommendation 4

Contracting authorities should set an expectation that trade unions have access to workplaces on all public construction contracts in line with the aspiration of the HS2 approach. Access should be facilitated throughout the supply chain.

Owner

Timeframe

With each procurement

Recommendation 5

Guidance should be updated to make clearer the connections between fair work, sustainable procurement duties, community benefits and discretionary and mandatory exclusions. The guidance should support more use of discretionary exclusions when a contractor or sub-contractor has breached its labour law obligations.

Owner

The Scottish Government

Timeframe

Immediate

Recommendation 6

All contracting authorities should include adherence to relevant collectively bargained pay rates as a condition of contract. Introducing this as clause within industry standard form contracts is an efficient, proportionate and transparent way to implement this and to ensure that it is applied throughout the supply chain.

Owner

All Contracting Authorities

Timeframe

Immediate

Recommendation 7

In every contract in which fair work questions were asked at the framework stage, tender stage or both, effective contract management by the contracting authority must take place to ensure that the response provided by the contractor is delivered in practice.

Owner

All Contracting Authorities

Timeframe

Immediate

Recommendation 8

All contracting authorities should be signatories to a Fair Work Charter collectively agreed with employers and trade unions. The Scottish Government should also facilitate the appropriate industry leadership group/forum, in negotiation with trade unions, to develop a single charter that sets out principles for advancing fair work in the industry. The single Fair Work Charter should then be used as a pass/fail condition within all construction procurement exercises in Scotland to ensure appropriate fair work standards are applied throughout the supply chain.

Owner

Timeframe

2.2 Strengthening Effective Voice

Effective voice is key to delivering all other dimensions of fair work. Effective voice in workplaces requires a safe environment where dialogue and challenge are dealt with constructively and where workers views are sought out, listened to and can make a difference. It is important to acknowledge the ongoing legacy of blacklisting and the impact that it continues to have on the workforce. For any voice mechanism to be effective the workforce must feel safe to raise issues, and they must feel able to seek help from unions – two activities that were directly and systematically discouraged through blacklisting for more than twenty years.

Leadership structures that support social dialogue also have an important role to play in ensuring positive relationships and supporting positive outcomes for workers and employers. Organisational structures, collective agreements and voluntary agreements such as charters and dispute resolution procedures all have a vital role to play in encouraging positive practice in workplaces and creating the working environment necessary for all workers to enjoy fair work outcomes.

Considering how collective bargaining agreements, voluntary agreements and social dialogue structures can be strengthened in the industry is key to supporting improved outcomes and will complement and reinforce the action taken through procurement.

2.2.1 Leadership, Trade Bodies and the Organisational Landscape

The organisational landscape in construction reveals a mixed picture. Repeated studies have pointed to the fragmented nature of structures within the industry with 120 trade bodies and a range of leadership organisations.[121] Yet many of these bodies play a vital role in supporting positive outcomes for the industry and facilitate a range of fair work structures where unions and employer organisations come together to negotiate standards and terms and conditions for workers.

The Construction Industry Training Board (CITB) is one of the few UK training boards still in existence and is an executive, non-departmental public body, sponsored by the UK Government's Department for Education, but almost wholly funded by its levy. In addition to the UK Government's apprenticeship levy, CITB is also empowered to impose a levy on employers operating in the construction industry. The amount paid is based on the total wage bill of the business.[122]

The Construction Scotland Innovation Centre (CSIC) was launched in October 2014 and is one of eight ‘industry-led and demand-driven’ Innovation Centres. It is supported by Scottish Funding Council (SFC), Scottish Enterprise, Highlands & Islands Enterprise and fourteen Scottish university partners. CSIC has a 35,000 sq. ft innovation factory designed to support construction related businesses to collaborate and innovate. The role of the CSIC is to support innovation and the development of modern methods of construction and automation, supporting the skills needed to achieve these aims.[123]

The construction industry is also one of nine industries in Scotland with an Industry Leadership Group.[124] Construction Scotland’s governance document sets out a range of specific categories of members with numbers of seats allocated by category allowing for a maximum of fifteen members. [125] At present the Industry Leadership Group consists of seven members, primarily large construction companies, and it is notable that it does not include representation from the workforce or trade unions. Currently only one member of the Industry Leadership Group – the Civil Engineering Contractors Association – is involved in setting collective agreements or industry standards. The primary role and remit of Construction Scotland ILG is to:

The Construction Leadership Forum was set up as a collaborative initiative of Construction Scotland and the Scottish Government. It was established in March 2019 to develop and implement an action plan of improvement initiatives aligned with government policies and the Construction Scotland Industry Strategy.[126] The Forum is chaired by the Minister for Business, Trade, Tourism and Enterprise and has a broader membership than the Industry Leadership Group also including a greater representation from trade associations, professional bodies and federations involved in collective bargaining. As a response to the pandemic the membership of this forum was expanded to include a trade union representative for the first time and the forum has a workforce issues sub-group that brings together many of the key stakeholder organisations.

It is welcome to see the broader membership of this leadership forum and the wide range of bodies included within the sub-groups. This is as an example of positive practice that developed within the industry in response to the pandemic.

Also as a response to the pandemic, the Construction Industry Collective Voice (CICV) was created bringing together a number of construction trade and professional bodies to gather intelligence, share advice and speak directly with the Scottish Government on issues affecting the industry. The CICV includes representatives from 28 professional bodies and aims to represent the interests of Scotland’s diverse construction supply chain with one consistent voice.[127]

The CICV was set up to help trade and professional bodies in the construction industry participate effectively within the Construction Forum. It is both positive and instructive that a wider and more inclusive leadership structure run by the Scottish Government has prompted a greater level of organisation and joint working across trade associations which is a valuable innovation that begins to address the fragmented nature of the industry.

The Scottish Government is now also setting up a Construction Accord to look at a range of key issues within the industry including procurement practice and the transition to net zero. The Construction Acord is a high-level agreement between the industry and the public sector and will be agreed by the Construction Leadership Forum in the coming months. This Inquiry believes that a key principle of work between the public sector and industry is an inclusive approach. All actions should support inclusive ways of working and should include balanced membership from a range of stakeholders including trade associations, professional bodies, federations and smaller employers. All approaches should also include balanced representation from trade unions and support social dialogue.

Scottish Government should also take action to support and maintain the social dialogue approach present in other parts of the industry by ensuring that all leadership groups build in representation from a range of union and employer stakeholders, ensuring representation that more accurately reflects the complexity of the industry. This would help build relationships and ensure that the perspectives of key institutions and standard setters, the workforce and smaller companies further down the supply chain are included within all leadership group structures. Their inclusion would also support the reach of decisions made at the strategic level back into the industry, making the groups more effective in delivering their core function.

It is also notable that the relationship between each leadership structure is not clear, nor is precise role that the, as yet unpublished, Construction Accord will play within the industry. Regardless of the reasons behind creating new approaches or supporting a range of structures, the principles of inclusion and social dialogue which place a value on collaboration and dialogue between all stakeholders should be at the heart of all structures designed, supported and facilitated by the Government.

2.2.2 Collective Bargaining

Often the view of collective bargaining is that it that takes place within large workplace and covers only employees. At first glance the construction industry, with its project based working, high number of small employers and high levels of self-employment does not seem to lend itself to collective bargaining structures. Yet sectoral bargaining agreements have been deployed for decades as a way to maintain standards, promote stable and safe working practices, facilitate training and upskilling and maintain terms and conditions for workers.

The Labour Research Department (LRD) conducted a study into the prevalence of collective bargaining in Scotland and identified 24 collective agreements within the construction industry with a further 101 subsidiary agreements derived from these principal agreements.[128] Through this study, they estimate that around 85,000 workers in Scotland are currently covered by collectively agreed terms and conditions. This represents around 45% of the total workforce, and 62% of the employed workforce when self-employment is excluded.[129]

The LRD figure was calculated by considering the prevalence and use of collective agreements and through discussion with employer and union stakeholders involved in collective bargaining. The ONS also calculates two separate figures for the collective bargaining coverage, one through the Labour Force Survey (LFS) which asks employees if their pay and terms and conditions have been set by collective agreement, and the other through the Annual Survey of Hours and Earnings (ASHE) which asks employers if pay has been set with reference to collective agreements. In the LFS survey, 25% of employees across the UK said their pay and terms and conditions were affected by collective agreement, while 20% of employers taking part in the ASHE survey at Scottish level stated that their employee’s pay was set with reference to a collective agreement.

Differences between the LFS and ASHE figures for collective bargaining coverage are to be expected reflecting that different questions are asked of different people.[130] The ONS recognises that the LFS figure is likely to be an underestimate as employees may be unaware that collective bargaining has taken place, while in general employers are more likely to be involved in the bargaining arrangement. This is borne out at an economy level where the LFS estimates that the overall collective bargaining coverage in Scotland is 38% while the ASHE figures suggest that 51.6% of the total Scottish workforce is covered. Yet the ASHE figures for construction seem to be out of step with this trend. This could reflect the employer’s understanding of the question and/or the fact that in construction – due to collective agreements being sectoral agreements – individual employers are not involved in bargaining directly.

On balance, the LRD’s research in this area is likely to be the most accurate measure as it considers in detail the application of existing agreements. Using this research, the table below outlines the coverage of the most significant sectoral agreements with the greatest level of coverage of the workforce. The table highlights that extensive collective bargaining is happening within the sector and illustrates a well-developed industrial relations infrastructure covering employers of different sizes and specialisms across all parts of the industry. The agreements are focused on different trades and together make up a set of basic standards that can be applied. However, the differences in figures between the LRD and the ONS sources might also point to piece-meal application of agreements, where employers adopt pay rates or other elements but do not apply the agreement in full. As noted below it might also point to some employers setting pay locally above the rate of the agreement but relying on the agreement for other terms and conditions.

Sectoral Collective Agreements

Agreement

Construction Industry Joint Council (CIJC)

Estimated Number of Workers in Scotland Covered

50,000

Parties

Agreement

Building and Allied Trades Joint Industrial Council (BATJIC)

Estimated Number of Workers in Scotland Covered

2,500 (FMB estimate of workforce covered based on 350 Scottish members. 20% of FMB members are sole traders and 50% employ 1-2 people)

Parties

Agreement

Electrical Contracting (Scotland) SJIB

Estimated Number of Workers in Scotland Covered

10,200

Parties

Agreement

Engineering Construction (NAECI) NJC

Estimated Number of Workers in Scotland Covered

1,600

Parties

Agreement

Plumbing (Scotland & Northern Ireland) Joint Industry Board

Estimated Number of Workers in Scotland Covered

3,000

Parties

Agreement

Scottish Painting Council (Scottish Decorators' Federation)

Estimated Number of Workers in Scotland Covered

4,500

Parties

Agreement

Local Authorities (craft) (Scotland)

Estimated Number of Workers in Scotland Covered

3,112

Parties

Agreement

Scottish Painting and Decorating Apprenticeships Council (SPADAC)

Estimated Number of Workers in Scotland Covered

Not Available

Parties

Agreement

Scottish Building Apprenticeship and Training Council (SBATC)

Estimated Number of Workers in Scotland Covered

500

Parties

*This represents the number of apprentices registered with the federation and a significant reduction from around 6,000 apprentices in 2017 when registration was compulsory.

Construction Industry Joint Council (CIJC) and the Building and Allied Trades Joint Industrial Council (BATJIC)

The Construction Industry Joint Council (CIJC) agreement is the most widely used agreement in the construction industry and its terms and conditions have come to be regarded as ‘the norm’[131] with elements of the collective agreement like holiday entitlement, working time arrangements and overtime schedules now standard practice in the industry. It is not necessary for an employer to be a member of a trade association to utilise the agreement. The 61-page CIJC agreement – ‘the Pink Book’ – is very explicit, leaving little flexibility to be altered, although employers can, and often do, choose to pay more than the negotiated rates. Employees can expect to receive a short two-page contract or statement of particulars that would refer to the much more detailed CIJC agreement.

The UK-wide Building and Allied Trades Joint Industrial Council (BATJIC) agreement is often used by smaller firms. BATJIC operates side-by-side with the CIJC agreement, with construction companies including the Federation of Master Builders (FMB) members able to compare them, following BATJIC exactly, combining aspects of both BATJIC and CIJC, or ignoring both. The FMB has noted that this agreement sets the standard in many small companies and therefore its reach is much wider than simply the formal membership of the federation recorded above.

The Scottish Builders Federation (SBF), the largest Scottish signatory to the CIJC, now mainly recruits new members on the strength of its business support services rather than its role in collective bargaining, although this still remains an important aspect of their offering to industry. SBF also does not enforce application of the CIJC and allows members to apply the agreed rates and terms or to develop their own. The SBF believes that CIJC coverage is declining, a trend thought to reflect attitudinal changes and a decline in collaboration in the industry.[132] More positively they also point to market rates for building trades in Scotland often being above that of collective agreement.

Scottish Joint Industry Board (SJIB) and the National Agreement for the Engineering Construction Industry (NAECI)

SELECT is the trade association for the electrical contracting industry in Scotland.

Founded in 1900 as the ‘Electrical Contractors’ Association of Scotland, it was the first trade association in the world to serve the electrical industry.

SELECT believes that that Scottish Joint Industry Board (SJIB) agreement is influential beyond its own membership and notes that 40% of the apprentices trained by SECTT are employed by non-member companies who apply the industry agreement. The SJIB handbook is open access and SELECT believes that most electrical employers follow the SJIB rates and handbook even when not in membership.

SELECT supports high quality apprenticeships and career pathways through the industry supporting workers into management roles and to own their own businesses. It is well respected as it maintains high standards of training and supports safe working practices across the industry. Unlike the CIJC there is no evidence to suggest that use of the agreement is declining and SELECT is well regarded within the industry.

The National Agreement for the Engineering Construction Industry (‘the NAECI’ or ‘The Blue book’) sets the terms and conditions of employment for the hourly paid engineering construction workforce. The NAECI is managed by the National Joint Council and is applied to engineering construction projects including on new-build projects and long-term repair and maintenance on sites throughout the UK. It is a national-level Working Rule Agreement, derived through the process of collective bargaining between the parties listed above. The NAECI promotes direct employment and is particularly valued for its dispute resolution procedure.

The NAECI was set up in 1981 as a direct response to rising costs for large-scale engineering projects due to walk-offs, industrial disputes and increasing competition for labour due to wage differentials between different sites. The NAECI agreement has a clearly defined structure and framework which has a proven track record in ensuring contractors can access and retain skilled labour, creating positive industrial relations and safe working practices and reducing the number of industrial disputes. It is, therefore, still widely used and the NAECI is the core agreement used in chemicals and petrochemical plants at Grangemouth and the Fife ethylene plant at Mossmorran but may also be applied to other engineering construction workforces. Where the NAECI has not been formally adopted for all engineering construction activities on a particular site, an individual contractor can, via the process of NAECI Registration, record their workforce numbers with NJC and then use the NAECI.

The Value of Collective Bargaining Agreements

All of the collective agreements noted above are entered into voluntarily by employers and unions. In this way there is no requirement for employers to abide by the terms of the collective agreements but once they choose to apply these standards they can thereafter be legally enforceable. This approach is often valued by both employers and unions as it creates certainty around costs, consistency of standards and a level playing field between operators.

The agreements are supported by organisational structures, trade bodies or professional associations. This provides support to employers to apply standards effectively and to resolve disputes that arise both informally and formally. The workforce is supported through trade unions who can rely on the structures within the agreement to raise and resolve issues.

Many of the agreements have existed for decades and continue to renew themselves being renegotiated on an agreed schedule to meet the changing needs to the industry. The agreements therefore come from the industry and reflect its particular needs and pressures over time. While the biggest of the agreements the CIJC appears to be in decline, the structure and potential for collaborative working remains and if effectively supported could play a key role in supporting the industry to meet future challenges and fully embed fair work.

2.2.3 Trade Unions, The Legacy of Blacklisting and Effective Dispute Resolution

In 2009 the blacklisting scandal in construction was exposed. Forty-four large construction companies were named as blacklisters including: Balfour Beatty, BAM, Sir Robert McAlpine, Laing O’Rourke and Galiford Try.[133] It should be recognised that many of these companies have now paid compensation to workers who were blacklisted and there are now laws in place in Scotland to exclude any company from winning public contracts who are still involved in blacklisting. Despite this the shadow of blacklisting in the industry remains.

Blacklisting was raised throughout this Inquiry as a contributing factor for the failure of a range of voice mechanisms within workplaces, particularly when run by large employers directly, in contrast to dispute mechanisms that were underpinned by collective agreements such as NAECI. Yet even when using collectively agreed mechanisms unions reported that workers often felt nervous raising issues and could worry about the consequences for their future earnings if they were seen to raise concerns or turn to unions for support.

The issue was also clearly seen in the early stages of the Inquiry when safety guidance was being prepared to support the construction industry through the COVID-19 pandemic. Unlike in other industries, construction leadership groups were slow to involve unions in the preparation of this guidance and the relationships between unions and in the Industry Leadership Group at the outset were clearly strained. However, it was also notable that progress was made in this period to improve relations and there were several examples of good practice emerging that could be built upon. It was particularly positive that a union seat was included within the Construction Leadership Forum and that social dialogue was improved and strengthened.

It is important for the construction industry as a whole to acknowledge the ongoing legacy of blacklisting and the impact that it continues to have on the workforce. For any voice mechanism to be effective, the workforce must feel safe to raise issues, and seek help from unions – two activities that were directly and systematically discouraged through blacklisting for more than twenty years. Ending blacklisting is therefore not sufficient to correct the impact of this practice and active steps will need to be taken – by the largest employers in particular – to demonstrate that this practice is in the past and that they now have positive relations with unions, they respond positively to issues raised by their workforce and ultimately there is a renewed culture of fair work in the industry.

Dispute Resolution

The issue of dispute resolution was particularly important for the CIIG as it supports effective voice and positive resolution of issues on sites to the benefit of workers and employers. Dispute resolution is a valuable feature of most industry agreements, supporting the maintenance of positive relationships on sites and providing an effective voice mechanism for workers. It was noted that the NAECI has a particularly valuable dispute resolution element that facilitates speedy resolution for workers and employers.

Case Study - Dispute Resolution and the NAECI

Central to the success of the NAECI is a highly effective, widely respected procedure for the prevention and resolution of issues at site level. Both formal and informal resolution is supported.

An informal ‘facilitation’ service is available from National Joint Council (NJC) staff that aims to resolve issues. Where both parties to the grievance agree that they want to use it, and where they have indicated that there is common ground that may help them move to a resolution, then an NJC facilitation meeting can take place. This happens in parallel to the timescale of the formal process which continues to its original timescales, unless resolution is achieved. Where NJC facilitation has been jointly requested and undertaken, there is a 60-70% success rate of resolution.

Where informal resolution is not achieved, there is swift recourse to national level for a final and binding decision. All parties who have signed up to the NAECI agreement accept to be bound by the decisions at Stage 4. The use of the Stage 4 procedure includes both dispute resolution and dismissal arbitration which applies to all workers who have passed their probation period and does not require two years of service.

Lead contractors choose to apply the NAECI agreement on sites and include this as a requirement for sub-contractors within their own contracting procedures or that of their managing agent. Where a site has fully adopted the NAECI agreement it will be registered with the NJC.

The use of the NAECI Procedures has increased significantly since the pandemic and is valued by both employers and unions. The NAECI requires that all work must continue while NAECI processes are running, so therefore limits industrial disputes and walk-offs but also provides swift and effective resolution of issues for workers.

Source: Submissions from the Nation Joint Council of the NAECI to the Inquiry

The NAECI agreement is only used on engineering construction sites and while other agreements have effective dispute resolution procedures there may be times when the complexity of projects means that issues can still arise on sites. There is therefore a benefit for contracting authorities to consider the process of dispute resolution and how this will be achieved on large public sector contracts. The aim of dispute resolution is to assist in resolving conflict as early as possible, to avoid negative impacts on organisational effectiveness and efficiency, as well as reducing the impact on the individual worker.

Case Study - Forth Replacement Crossing – ACAS Mandatory Dispute Resolution Procedure

An initial dispute resolution processes was put in place for 2011, when the construction phase of the Forth Replacement Crossing was just underway.a However, this proved ineffective, particularly given the multiple layers of contracting and sub-contracting which made ‘chains of responsibility’ difficult to uphold. Serious health and safety concerns were not being addressed and ‘wildcat’ industrial action went ahead.

Ultimately, Scottish Government ministers requested that the Advisory, Conciliation and Arbitration Service (ACAS) become involved in 2017.b ACAS set up a new, mandatory collective disputes procedure to address the frictions that existed between the various employment relationships and the absence of worker voice. The process centres on employment relation dispute issues that are raised collectively, rather than by a single individual. Importantly, the process is designed not to interfere with any industry agreement already in place. Early resolution of issues aims to avoid the possibility of delays/disruption to the successful completion of the contract.

The process set out by ACAS includes six stages – with maximum timescales for each. This begins with the recognised trade union raising the issue with the direct employer/contractor in an effort to reach agreement. If the direct employer/contractor does not address the issue, it is raised up to the main contractor. After this point ACAS conciliation is requested by the trade union and arranged with the direct employer/contractor. Non-cooperation by the direct employer/contractor is again raised to the main contractor who should reinforce to the direct employer/contractor the importance of adhering to the disputes procedure. The main contractor may, at that point, become involved in the conciliation where there is a breach of the relevant agreement or non-compliance with the contract. If, at this point, an agreement is not reached, ACAS will contact the client to discuss the impasse and the potential implications. These stages should be completed within 42 days.c

Sources:

a. Transport Scotland (2020), Lessons Learned from the Forth Replacement Crossing Project: 2007 to 2017

b. Scottish Construction Now (2016), Acas brought in over Queensferry Crossing low pay claims

c. ACAS submission to this Inquiry

The case study of the Forth Replacement Crossing highlights an important example of good practice where ACAS created and ran a mandatory dispute resolution procedure. The CIIG believes that there is merit in greater use of mandatory dispute resolution procedures particularly on large-scale and complex contracts.

The benefits of introducing a collective disputes procedure are that it:

The CIIG believes that the issue of dispute resolution should be considered in all large-scale public contracts before work begins onsite. The contracting authority, lead contractor and relevant trade union should work together to agree an appropriate and mandatory dispute resolution process that all parties onsite must adhere to. This could be through existing collective agreements or through a standalone procedure as noted in the case study above. Ultimately an approach should be agreed and communicated to all workers and employers on site to support fair work outcomes. Just as with the NAECI, the lead contractor should require its use through its own contracting procedures or that of the managing agent.

2.2.4 Recommendations Related to Strengthening Effective Voice

Effective voice is key to delivering all other dimensions of fair work. Leadership structures that support social dialogue have an important role to play in ensuring positive relationships and supporting positive outcomes for workers and employers. Organisational structures, collective agreements and voluntary agreements all have a vital role to play in encouraging positive practice in workplaces and creating the working environment necessary for all workers to enjoy fair work outcomes. The Inquiry found that:

The Inquiry Group therefore makes the following recommendations:

Strengthening Effective Voice

Recommendation 9

All existing industry level groups including Construction Scotland and the Construction Leadership Forum should include balanced membership from a range of stakeholders including trade associations, professional bodies, federations and smaller employers. All such groups should also include balanced representation from trade unions.

Owner

Timeframe

Immediate

Recommendation 10

The relationship between each of the industry leadership groups should be clarified and the Scottish Government’s interaction with each group clearly articulated.

Owner

The Scottish Government

Timeframe

Immediate

Recommendation 11

All industry leadership groups should seek opportunities to support, through voluntary agreement, collaborative working and mandatory approaches where possible including:

Owner

All Industry Leadership Groups and Forums

Timeframe

Immediate and ongoing

Recommendation 12

The issue of disputes resolution should be considered in all large-scale public contracts before work begins on-site. The contracting authority, lead contractor and relevant trade union should work together to agree an appropriate and mandatory dispute resolution process that all parties on-site must adhere to. This could be through existing collective agreements or through a standalone procedure, for example a procedure backstopped by ACAS.

Owner

Timeframe

With each large-scale project