Universal Periodic Review 2022: Scottish Government Position Statement

8. Business, Fair Work, and Employment

Businesses can play a significant role in promoting human rights in society by providing decent jobs, delivering services, generating economic growth and developing infrastructure. However, businesses can also risk having a negative effect on people's human rights through their operations, relationships, or supply chains if insufficient attention is paid to the impact of their activities. The Scottish Government is therefore committed to giving practical, every-day effect to the human rights obligations and principles set out in the UN Guiding Principles on Business and Human Rights, the ICESCR, and the range of International Labour Organisation ("ILO") conventions to which the UK is a State party.

A) Promoting Fair Work and Responsible Business

Fair work is key to the Scottish Government's ambition to move towards a wellbeing economy, and is central to supporting economic recovery and renewal. Our ambition is for Scotland to be a leading Fair Work Nation by 2025, meaning that people in Scotland will have a world-leading working life where fair work drives success, wellbeing, and prosperity for individuals, businesses, organisations and society.

Through our Fair Work First policy we are leveraging employers' commitment to fair work by applying criteria to public sector grants, other funding and contracts where it is relevant and proportionate to do so. Through the landmark Bute House Agreement^[342], and subject to limits on devolved competence, we are strengthening this conditionality yet further.

Building on the responses to our recent Consultation: Becoming a Fair Work Nation^[343], we are also in the process of developing a refreshed, integrated Fair Work Action Plan, which will bring together our work to support Scotland becoming a Fair Work Nation by 2025. The refreshed action plan will be published in autumn 2022. This work will continue to be supported and informed by a Ministerial-led Gender Pay Gap Working Group made up of equality stakeholders such as Close the Gap, academics, the Scottish Trades Union Congress ("STUC"), businesses, the Equality and Human Rights Commission ("EHRC"), and the Advisory, Conciliation and Arbitration Service ("ACAS").

The Fair Work Convention^[344] is independent of Government and brings together employers and unions with academic expertise to advise Ministers on, and promote fair work. Their Fair Work Framework^[345] defines fair work as work that offers effective voice, opportunity, security, fulfilment and respect. The Fair Work Convention's landmark inquiry into social care was published in early 2019 and makes a range of recommendations around improving fair work in social care^[346]. The recommendations of this inquiry were adopted in full by the Scottish Government and have fed into the Government's design of the NCS. In 2022, the Fair Work Convention published the findings of its inquiry into the construction industry^[347] and launched an inquiry into fair work in the hospitality industry.

Scotland's Labour Market Strategy^[348] sets out a vision for a strong labour market that drives inclusive, sustainable economic growth characterised by growing, competitive businesses, high employment, a skilled population capable of meeting the needs of employers, and where fair work is central to improving the lives of individuals and their families. It also sets out the steps the Scottish Government is taking to persuade and influence businesses of the benefits of fair and inclusive work.

Scotland's continued economic recovery will depend on the provision of high quality, tailored pre-employment support. That is why we have continued to progress No One Left Behind^[349], our strategy for placing people at the centre of the design and delivery of employability services, and ensured that our devolved employability service Fair Start Scotland^[350] will continue until March 2023.

The Scottish Government is committed to giving effect to the UN Guiding Principles on Business and Human Rights^[351]. In 2018, the SNAP Better World Action Group published a National Baseline Assessment on Business and Human Rights, which was developed in consultation with civil society organisations, trade unions, representatives of the business sector, and children and young people^[352]. The National Baseline Assessment provided a systematic evaluation of Scotland's current implementation of the Guiding Principles to help inform the development of a future national action plan on business and human rights in Scotland. The Scottish Government also welcomes and supports action taken to implement the UN Guiding Principles under the existing UK National Action Plan^[353].

B) The Living Wage and Living Hours

The Scottish Government has long championed payment of the Living Wage and the real benefits to Scotland's economy of treating people more fairly. It has demonstrated its commitment by becoming an Accredited Living Wage Employer, and by providing funding to the Scottish Living Wage Accreditation Initiative^[354]. The Scottish Government promotes the real Living Wage which applies to all employees aged 18 and over. It is calculated according to the basic cost of living and takes account of the adequacy of household incomes for achieving an acceptable minimum living standard.

Towards the end of 2021, we announced that companies bidding to win Scottish Government contracts will have to commit to paying at least the real Living Wage, where relevant and proportionate^[355]. We will introduce a requirement on public sector grant recipients to pay at least the real Living Wage to all employees (subject to limits on devolved competence) and to provide appropriate channels for effective workers' voice, such as trade union recognition. We will engage with unions, business and other stakeholders to agree the detail of this conditionality to ensure it is proportionate and effective in delivering real benefits. We will also consider how the conditions can be applied to non-departmental public bodies, again within the limits of devolved competence.

In July 2021, the Minister for Just Transition, Employment and Fair Work announced the launch of the Living Hours Accreditation Scheme for Scotland^[356]. This Scheme recognises that in addition to payment of the real Living Wage, the number and frequency of work hours are critical to tackling in-work poverty. Businesses looking for certification under the scheme must pay at least the real Living Wage rate, provide a contract reflecting accurate hours worked and a guaranteed minimum of 16 hours a week (unless the worker requests otherwise), and ensure at least 4 weeks' notice of shifts and guaranteed payment if shifts are cancelled within this period.

The Scheme will help to alleviate in-work poverty and create more secure, sustainable and satisfying jobs. Like the established Living Wage Accreditation network in Scotland, the Scheme recognises the different business environment in Scotland and builds on the network of over 2800 Living Wage Accredited employers in Scotland.

C) Zero Hour Contracts

The Scottish Government firmly opposes the inappropriate use of zero hours contracts and other non-standard types of employment that offer workers minimal job or financial security. Although zero hour contracts fall under employment law which is reserved to the UK Government, we are committed to mainstreaming fair work throughout Scotland. Through our Fair Work First policy we will use the Scottish Government's financial powers to drive fair work practice, and this includes no inappropriate use of zero hours contracts.

The Scottish Government does not directly employ people on zero hours contracts. The Scottish Government and its main agencies have no employees, workers through contracted frameworks, or inward secondees who have contracts with minimum hours per week listed as zero. The inappropriate use of zero hour contracts is unacceptable and they undermine our ambitions to grow our economy and tackle inequalities in our society. We will take whatever action we can to eradicate unfair working practices.

D) Blacklisting

The Scottish Government regards the practice of blacklisting in any form as unacceptable, and notes the serious negative impacts it can have on the lives of those affected. The Employment Relations Act 1999^[357] and the Employment Relations Act 1999 (Blacklists) Regulations 2010^[358] are reserved legislation, and any available remedies are determined by the UK Government and are delivered through the employment tribunal system.

The Public Contracts (Scotland) Regulations 2015^[359] (for higher value contracts) and the Procurement (Scotland) Regulations 2016^[360] (for lower value contracts) contain provision to ensure that companies that are involved in blacklisting will be excluded from bidding for public contracts. Public bodies are legally required to exclude from bidding for public contracts any businesses which have been found to have breached the 2010 Regulations, or which have admitted to doing so, until they have taken appropriate remedial measures or a period of three years has elapsed - the longest period of exclusion allowed.

E) Scottish Business Pledge

The Scottish Business Pledge^[361] is a values-led partnership between Government and business that is focused on boosting productivity and competitiveness through fairness, equality and sustainable employment. It is a free-to-make voluntary commitment bringing together "elements" that have been shown to improve productivity and competitiveness and to build sustainable growth that also achieves fairness, equality, opportunity and innovation.

The pledge currently has three core mandatory elements:

• payment of the real living wage;
• no inappropriate use of zero hours contracts;
• action to address gender pay gap, proportionate to the size of the company.

Businesses must also to choose to commit to any 5 of the following 7 elements according to their particular sector:

• investing in a skilled and diverse workforce (previously gender balance);
• workforce engagement, offering an effective voice to workers;
• environmental impact;

• prompt payment;
• innovation;
• internationalisation;
• playing an active role in the community.

Since its launch, the number of businesses committing to Scottish Business Pledge has grown. Recognising the need to improve both its scale and impact, we reviewed the Business Pledge in 2018, and in response to business feedback we launched the updated Business Pledge in October 2019. We also established a Business Leadership Group for the Business Pledge to put business firmly in the driving seat and to raise awareness, build capability, and drive increased impact for the Business Pledge.

F) Equality in the Workplace

In 2018, the Workplace Equality Fund^[362] ("WEF") was launched to support employers in addressing the long-standing barriers that particular groups face in entering and progressing in the labour market. A report evaluating the impact of the WEF was published in April 2021^[363]. The recommendations made by the report included ensuring that any future fund allowed a longer period for projects to take place and embedding learning and sustainable change within the relevant organisations. The Scottish Government has now procured a new fund administrator to run the WEF for 2021-2024. The Fund will continue to support women, workers over 50 years old, disabled people and minority ethnic people. The WEF will also continue to support women transitioning through the menopause, victims of domestic abuse, and workers who are experiencing social isolation and loneliness, such as unpaid carers.

The refreshed Fair Work Action Plan will incorporate our existing commitments to reduce the gender pay gap and to support minority ethnic groups, disabled people, and workers over 50 years old to ensure an intersectional approach to tackling inequality in the workforce (see Section 8(A)).

i) Gender Equality in the Workplace

In March 2019, the Scottish Government published A Fairer Scotland for Women: Gender Pay Gap Action Plan^[364], setting out actions to address the gender pay gap which look at the drivers and influences on the gender pay gap at each stage of a woman's life, including leadership, employment, early learning and childcare, school, post-school and training, employability, social security, and economic development. An update report was published in March 2021 to ensure that the plan was still relevant and that the actions were still fit for purpose to support women through and beyond the pandemic^[365]. Going forward, actions will be integrated into the refresh of the Fair Work Action Plan (see Section 8(A)). The Scottish Government also funds Close the Gap^[366] to change employment practices and workplace cultures to support gender equality and tackle the pay gap.

Separately, in the Programme for Government 2018-2019^[367] the Scottish Government committed to invest, over a three year period, to support the return to the workplace of 2,000 women who have had a career break. Since 2018, the programme has helped over 1,300 women with their transition back into the workplace, offering training, skills and peer support at a time and pace that best suits their needs. 11 projects are receiving funding in 2022-2023 to support women including disabled women, minority ethnic women and those transitioning through menopause.

Furthermore, the Pregnancy and Maternity Discrimination Working Group completed its remit and issued a final report in January 2021^[368]. Issues relating to pregnancy and maternity continue to be represented on the Gender Pay Gap Working Group. The Scottish Government has committed to emulate New Zealand, where families who experience miscarriage or stillbirth are entitled to 3 days of paid leave, by delivering this within the public sector and calling on the UK Government to make the necessary changes to employment law to make it available for everyone. Scotland has also committed to building a system of wrap-around school-age childcare by the end of this Parliament, offering care before and after school and during the holidays, and supporting parents - particularly those on low incomes - to have secure and stable employment.

In addition, the Scottish Government funds Equate Scotland to support the recruitment, retention, return and success of women in science, technology, engineering, and maths ("STEM") jobs where they are significantly underrepresented. Equate Scotland also deliver the CareerWISE programme, which offers female undergraduates paid work placements with STEM employers.

ii) Race Equality in the Workplace

Since the launch of the WEF in 2018, we have funded 24 projects with a collective funding of over �355,000, to support employers to focus on equality issues faced by minority ethnic workers.

In September 2020, the Scottish Government published the Minority Ethnic Recruitment Toolkit^[369] to support employers to improve their workforce diversity and re-examine their recruitment processes. Since then, the Scottish Government has considered the recommendations from the Scottish Parliament's then-Equalities and Human Rights Committee on race equality, employment and skills^[370] and has taken forward a suite of measures to support and encourage public sector leaders to address racial inequality in their organisations and to improve their policies and practices around the recruitment, retention and progression of people from ethnic minority communities.

In March 2021, a Public Sector Leadership Summit brought together Ministers and senior leaders in the public sector to unveil a joint commitment to advance race equality and take forward the Committee's recommendations^[371]. In December 2021, the National Conference on Race Equality in Employment was held with race equality stakeholders to monitor progress against the joint commitment and identify barriers to further progress. More recently, the Scottish Government held a workshop on gathering ethnicity workforce data to help organisations to build a stronger evidence base and to better identify inequality in their organisation.

The Scottish Government is currently developing an ethnicity pay gap strategy, to be published later this year, to support and encourage employers to reduce their ethnicity pay gap and take forward practices that seek to improve labour market outcomes for ethnic minorities. It will also encourage employers to take a proactive, anti-racist and intersectional approach to barriers faced by people from ethnic minority communities in the workplace. The Strategy is being developed alongside and aligned with the refreshed Fair Work Action Plan which will incorporate relevant actions to tackle structural inequalities faced by people from ethnic minority communities in the workplace (see Section 8(A)).

iii) Disability Equality and BSL in the Workplace

The Disability Employment Gap ("DEG") is the difference between the employment rates of disabled people and non-disabled people of working age. Tackling the disability employment gap is an integral part of the Scottish Government's commitment to the promotion of Fair Work principles across the Scottish Economy and in creating inclusive economic growth.

In December 2018 we published A Fairer Scotland for Disabled People - Employment Action Plan^[372]. This Plan focuses on supporting employers to recruit and retain disabled people, supporting disabled people to enter employment, and supporting the transition of young disabled people from school. The plan includes a commitment to at least halve the DEG by 2038, and despite the impact of COVID-19 we remain on track to achieve this commitment. Based upon the most recent data from the Office of National Statistics' Annual Population Survey, the DEG in Scotland in 2021 was 31.0 percentage points, compared to 37.4 percentage points in 2016, our baseline year.

We are undertaking a refresh of the Plan for publication later in 2022 as part the refreshed integrated Fair Work Action Plan (see Section 8(A)). A working group - co-chaired by Scottish Government officials and the Glasgow Disability Alliance - was established to lead this work, involving a range of stakeholders including DPOs, with the aim of ensuring that the voice of lived experience is at the heart of the process.

Separately, the Parental Employability Support Fund^[373], delivered through No One Left Behind, provides employability support to low income families from six priority family groups identified as being most at risk of experiencing poverty, including families with a disabled adult or child. The Fund supports parents to increase earnings through employment by gaining and progressing in fair work. In 2019-2021, the Scottish Government invested more than �14 million in the Fund, of which �6 million was allocated to boost support for unemployed disabled parents.

Furthermore, since November 2020, �130 million has been invested for our Young Person's Guarantee^[374] to ensure everyone aged 16 to 24, including disabled young people, has the opportunity of work, education, training and volunteering. We are working with partners to deliver on commitments set out in our Equality Action Plan^[375] so that every young person can access and sustain these opportunities through the Guarantee. Recognising the ongoing impact of the pandemic, we have committed up to a further �45 million in 2022-2023 to continue these opportunities.

The Scottish Government is committed to supporting inclusion in the workplace for BSL users, making opportunities for training and work available to all. Measures relating to BSL have been included in the BSL National Plan 2017-2023^[376], such as the inclusion of BSL in information shared by the Scottish Government and the provision of the WEF since 2017 to support inclusion in the workplace for BSL users.

G) Flexible Working

New Fair Work First criteria came into effect from October 2021 which asks recipients of public sector grants and other funding and contracts where relevant to offer flexible and family-friendly working practices for all workers from day one of employment^[377].

The Scottish Government funded Flexibility Works in 2021-2022 with �94,850 to support and promote the development of flexible and family-friendly workplaces. Through our Social Innovation Partnership programme we are developing a programme of further support which will include offering vital advice and support to business and organisations on the benefits of flexible working practices. The Scottish Government also funded Timewise in 2021-2022 with �167,070 to support the delivery of A Fair, Flexible Work Programme for Scotland^[378].

H) Employment Tribunal Fees

In 2013, the UK Government introduced employment tribunal fees. The Scottish Government strongly opposed the introduction of these fees on the basis that they would restrict access to justice for workers and would create a financial barrier for legitimate claims. The introduction of employment tribunal fees was followed by a dramatic decrease in the number of cases being taken forward and resulted in the UK Supreme Court ruling in July 2017 that the fee order interfered unjustifiably with the right of access to justice and discriminated unlawfully against women in particular. The Scottish Government remains committed to the principle that there will be no fees for employment tribunals once the management and operation of them is devolved.

I) International Trade

In May 2019, the Scottish Government published Scotland: A Trading Nation - A Plan for Growing Scotland's Exports^[379]. The Scottish Government encourages Scottish-based companies to adopt ethical business practices, conduct appropriate due diligence on their business partners, and be aware of local business conditions in export markets. To support this, businesses have access to the UK Government's Overseas Business Risk Service^[380], which provides analysis on overseas markets to exporters, including on potential risks such as human rights issues, bribery and corruption, terrorism, criminal activity and intellectual property.

Scotland's Vision for Trade^[381], published in January 2021, outlines the five principles by which we will judge our own trade policy decisions and contribute to those of the UK Government and of our international partners: Inclusive Growth, Wellbeing, Sustainability, Net Zero and Good Governance. The principle of Good Governance includes the Scottish Government's commitment to an inclusive Scotland that protects, respects, promotes and implements internationally-recognised human rights. We have a strong and enduring commitment to securing and supporting democracy, the rule of law and human rights in other parts of the world. The Vision for Trade sets out the levers that the Scottish Government has available to support the coherence between human rights and trade, as well as our asks for the UK Government in using their levers in in a way that is supportive of Scotland's objectives.