Companies 'must pay real living wage' to qualify for public sector grants

New rules that come into effect on Saturday mean organisations applying for public sector grants will have to pay staff the real living wage.

In addition, applicants will also have to show they provide ways for workers to have an “effective voice” within the organisation.

Neil Gray, wellbeing economy and fair work secretary, said: “Public sector funding should be used for the wider benefits needed in a wellbeing economy, such as the promotion of fair work – including the creation of more high quality, well paid jobs. This in turn will support stronger businesses, and vibrant, healthy communities.

“By extending the reach of our Fair Work First criteria – which has already been applied to some £4bn of public funds since 2019 – we can better tackle the cost crisis, poverty and social inequalities.”

The new rules have been introduced as part of the Bute House Agreement, the deal between the SNP and Greens which brought the latter party into government at Holyrood for the first time.

Lorna Slater, green skills, circular economy and biodiversity minister, said: “While this is essential to improving worker experience, research has also shown businesses with stronger employee voice and representation perform better and are more productive.

“We will work with employers, workers and trade unions connected to organisations applying for a public sector grant to ensure we are continuing to improve terms and conditions, worker wellbeing and to develop progressive and fairer workplaces.”

The new rules come into force just days after a union claimed staff at a popular Glasgow bar were told they will no longer receive the real living wage.

Workers at Brel in the west end of Glasgow will reportedly have their pay cut as the business downgrades their wages to the national minimum wage instead.

A spokesperson for Brel disputed the claims, made by Unite Hospitality, and said it was scrapping the real living wage to ensure the business remains sustainable.

Currently, the national minimum wage in the UK – outside of London – is £10.18 for those under 23 and £10.42 for those over 23.

The real living wage is £10.90 for everyone over the age of 18.