The Fair Work Standards, Simplified

A practical breakdown of FW1 – FW4 for purpose-driven companies

What makes a job a good job? For B Corps, it starts with Fair Work: a set of concrete standards designed to help companies build strong jobs and even stronger workplace cultures. Part of the B Impact Assessment, the Fair Work Standards move companies beyond surface-level commitments and into measurable actions rooted in dignity, transparency, and shared purpose.

The full documentation is well worth reading. But if you’re looking for a practical starting point, this guide offers a thorough clear, digestible walkthrough of the four pillars of Fair Work:

• FW1: Set clear expectations for employees
• FW2: Implement fair wage practices
• FW3: Incorporate employee feedback into decision-making
• FW4: Measure and improve workplace culture

Together, these standards lay the groundwork for treating employees fairly, while driving outcomes like alignment, retention, adaptability, and long-term resilience.

Fair Work Standard 1: Set Clear Expectations for Employees

When employees know exactly what’s expected of them, they can do their best work. That’s the idea behind FW1 of the Fair Work standards: every worker deserves a clear, fair, and documented understanding of their role, compensation, and working conditions.

At its core, FW1 is about operational precision. It requires companies to provide every employee—regardless of role or location—with a signed employment contract or offer letter that covers the essentials:

• The name of the company and the employee
• The nature, location, and start date of the work
• Working hours, base wage, and any additional wage components
• Duration of employment and termination terms 

Fair Work sets the expectation that these documents must be written in a language the employee understands. But meeting that requirement isn’t enough on its own; what matters is how clearly and respectfully expectations are communicated. B Lab encourages companies to use plain language, explain contracts verbally before signing, and create space for questions or accommodation requests.

And if someone’s already on the job without a formal contract? In order to comply, the company should issue a retroactive letter that includes all the same details. Better late than never: retroactive clarity still matters.

Why it matters: When expectations are vague, accountability slips, rework piles up, and frustration grows—especially across functions or in fast-scaling environments. But when roles are clearly defined, teams move faster and stay aligned. Clarity isn’t just operationally smart; it’s ethically essential. Every worker deserves to understand the terms of their job and the conditions of their work.

What about shift-based or variable schedules?

FW1 also applies to companies that use variable scheduling—where workers don’t know their hours until shortly before a shift, as in gig work or seasonal labor. This standard calls for these companies to adopt cancellation policies that offer balanced protections for both parties. That includes:

• A shared cancellation deadline for both sides
• Guaranteed pay if the company cancels after that deadline
• Transparent rules for pay in cases beyond the company’s control (e.g., weather events, emergencies)
  

The goal is predictability and fairness. Workers shouldn’t lose income without notice because of a last-minute change; and they shouldn’t be penalized for canceling within an agreed-upon window.

Why it matters: Unpredictable schedules create stress for both companies and workers. Equal cancellation policies reduce chaos, build trust, and give everyone firmer ground to plan ahead. In roles where last-minute changes are the norm, stability is a key to morale, retention, and long-term performance.

Fair Work Standard 2: Implement Fair Wage Practices

Pay isn’t just a number; it’s a signal. When companies commit to transparent, equitable wage practices, they build trust with their teams, reduce attrition, and strengthen their reputation in the talent market. Fair wage practices form the backbone of B Lab’s FW2 standard, which sets a high bar for compensation transparency and accountability. Here’s how it breaks down:

FW2.1: Eliminate wage history questions

Companies may not ask job candidates about their past compensation or their desired salary unless they’ve already disclosed a wage scale for the role. This requirement is designed to break the cycle of historical pay inequities that can follow workers across jobs and industries.

Why it matters: Relying on salary history can reinforce systemic disparities. This standard helps ensure pay is tied to the role’s value, not to legacy bias or inequitable past benchmarks.

Implementation tip: You don’t need a separate policy; just embed this requirement into your hiring guidelines or employee handbook. What matters is clarity and follow-through.

FW2.2: Communicate how compensation works

To meet the standard, companies are expected to clearly communicate how wages are set, what benefits are included, and how compensation is reviewed. That includes issuing regular payslips with plain-language breakdowns of:

• Base pay
• Bonuses or allowances
• Any deductions 

Payslips must also be provided in a language the employee understands.

Why it matters: If workers can’t understand how they’re paid, they can’t advocate for fairness. Clear, accessible pay communication builds trust, prevents confusion, and helps companies spot issues before they escalate.

Going the Extra Mile Bonus points: Use consistent terminology across contracts, payslips, and employee materials, so no one has to decode HR jargon just to understand their paycheck.

FW2.3: Define and share internal wage scales

To meet the standard, large companies (250+ employees or >75 million <350 million in revenue USD) must create and share internal wage scales tied to job levels (e.g., entry-level, manager, senior). These scales don’t need to include bonuses or list individual salaries—just clear, role-based pay ranges.

Why it matters: Wage scales reduce bias in compensation decisions and bring structure to pay conversations. They also give employees a clearer sense of growth opportunities and what it takes to move up.

Best practice: Make wage scales part of the candidate and employee experience. Include them in job postings, onboarding materials, and internal resources to build a culture of proactive transparency.

FW2.4–2.6: Measure and close the gender wage gap

For companies with 250+ employees or >75 million <350 million in revenue USD, Fair Work sets a clear progression:

• FW2.4: Calculate your gender wage gap using a recognized method (e.g., company-wide average, role-based comparison, or adjusted analysis).
• FW2.5: Publicly disclose the gap and your methodology (required for X Large and XX Large companies).
• FW2.6: Re-measure regularly and either close the gap (defined as women earning at least 95% of what men earn on average) or provide a clear, transparent explanation of why progress hasn’t been made. 

Why it matters: The wage gap is real—and persistent. Measuring it puts hard numbers behind equity commitments. Publishing those numbers builds public trust. And closing the gap demonstrates that a company doesn’t just talk about fairness; it delivers on it.

Good to know: “Closing the gap” doesn’t mean reaching absolute parity. According to this standard, it means reducing the average gender pay gap to within 5%.

FW2.7: Evaluate equal pay for work of equal value

This is the deeper equity test. Meeting this standard involves assessing whether roles that contribute similar value to the business—like a cleaner and a security guard—are paid fairly in comparison, even if the job titles or functions differ. The evaluation must be structured, gender-neutral, and based on factors such as effort, responsibility, qualifications, and working conditions.

Why it matters: This is where many of the deepest pay inequities are hiding. Looking beyond job titles to the actual value of work helps surface and correct long-standing gaps—ones often affecting women, people of color, and migrant workers in undervalued roles.

Reality check: This takes real commitment and rigor. But for X Large and XX Large companies, this assessment is required by Year 5; and it’s one of the most powerful steps a company can take to advance wage equity at scale.

FW2.8: Ensure living wages for your lowest-paid workers

Every company should address how it compensates its lowest earners. This standard offers three compliance pathways:

• Option A: Pay a living wage. Use a trusted benchmark and ensure total compensation meets predictable, usable, and accessible standards.
• Option B: Pay a collectively bargained wage. This must exceed legal minimums and be part of a legitimate, ongoing agreement.
• Option C: Build a plan. Calculate your living wage gap, create a roadmap to close it, and meet at least two additional criteria (e.g., reaching a 75% wage threshold, public transparency, inflation adjustments, free childcare, or bonuses). 

Why it matters: The strongest signal of fair pay isn’t how you reward top performers; it’s how you support those earning the least. Paying a living wage is one of the most direct ways to reduce poverty, improve retention, and build a more motivated, stable workforce.

Important detail: The standard outlines clear rules for what counts as “wage.” For example, cash typically counts; gift cards usually don’t. It also explains how to factor in non-cash benefits like housing, transport, or healthcare depending on regional norms.

Fair Work Standard 3: Incorporate Employee Feedback into Decision-Making

Employee voice isn’t just a matter of morale; it’s a strategic advantage. Fair Work Standard 3 ensures companies move beyond surface-level engagement and toward formal systems that invite, respect, and act on worker input. These systems help organizations tap into frontline insight, adapt to change, and build long-term trust.

There are two core components: establishing formal employee representation, and building high-quality feedback loops into decision-making.

FW3.1: Establish a formal employee representation mechanism

Meeting this standard involves providing a structured, inclusive mechanism to ensure workers are represented in matters that affect them. This goes beyond casual conversations or one-off surveys; it embeds employee voice directly into governance and organizational strategy.

Key requirements:

• Create a documented representation structure (e.g., policy, charter, agreement, or MOU)
• Ensure all workers are eligible to participate or serve as representatives
• Schedule regular meetings and maintain notes
• Require representatives to communicate with company leadership at least twice a year
• Provide time during working hours for representatives to fulfill their duties 

If workers decline to participate, companies need to document that decision and share the results transparently. The goal isn’t to force participation, but to make sure the door is wide open.

Note: Employee resource groups (ERGs) don’t fulfill this requirement. While valuable, ERGs are not designed to advocate on behalf of the broader workforce. Valid formats include unions, works councils, and elected worker committees. In countries where these are restricted, companies may adopt alternative structures, as long as they meet the same formal criteria.

Recommendations:

• Prioritize union-led mechanisms where available
• Extend participation to independent contractors when appropriate
• Offer training and support to help representatives succeed 

Why it matters: Formal representation ensures that workers have more than just a voice—they have a seat at the table. It builds trust, improves decision-making, and strengthens the fabric of stakeholder governance. Companies that embed this structure foster loyalty and resilience, especially during moments of change or challenge.

FW3.2: Use employee feedback in decision-making

Gathering input is just a start. This standard challenges companies to go further: actively seeking out employee perspectives, weighing them in decision-making, and closing the loop with clear communication and follow-through.

Key requirements:

• Reach out to workers (or their representatives) before making major changes
• Thoughtfully incorporate feedback into planning
• Communicate decisions clearly, including how worker input shaped the outcome 

Note: Feedback doesn’t have to be unanimous to be useful. What matters is that it’s genuinely considered and visibly impacts decisions.

Common methods:

• Surveys, polls, or ballots
• Focus groups or facilitated discussions
• Worker committees, councils, or unions
• Third-party assessments or social audits 

Relevant decisions include:

• Compensation or benefits changes
• Working hours, locations, or conditions
• Workplace redesigns or technology rollouts
• Mergers, acquisitions, or controversial partnerships 

Recommendations:

• Clearly explain which feedback was adopted, which wasn’t, and why
• Use the strongest mechanism available (e.g., unions > councils > committees)
• Invite input on company strategy, not just HR policy 

Why it matters: Employees are on the front lines of your business: they see what’s working and what’s not. Overlooking their input means ignoring real-time insight and exposing the company to costly blind spots. But it’s not just about efficiency; it’s about fairness. Giving workers a voice in decisions that affect them is a matter of respect and dignity. Done well, meaningful feedback loops lead to better decisions, smoother change, and a culture grounded in trust, equity, and shared ownership.

Fair Work Standard 4: Measure and Improve Workplace Culture

Once seen as intangible, workplace culture is now a measurable and strategic asset. Fair Work Standard 4 ensures companies treat it that way: not just by surveying sentiment, but by acting on results, addressing disparities, and improving the lived experience of every worker.

FW4.1: Measure what matters

This standard sets the expectation that companies will assess workplace culture annually to better understand how employees are experiencing work. This isn’t about checking boxes. It’s about asking the right questions, listening deeply, and capturing meaningful signals across your workforce.

Each year, companies aiming to meet this requirement must assess at least two of the following themes:

• Satisfaction
• Wellbeing
• Belonging
• Feeling engaged
• Being engaged
• Psychological safety 

Measurement guidelines include:

• Focusing on outcomes, not just participation (e.g., tracking whether a training made a difference, not just who attended)
• Making participation optional, and clearly communicating that to employees
• Using both quantitative and qualitative tools (e.g., surveys and listening sessions) if the company has 50+ workers
• Defaulting to anonymous feedback. If anonymity isn’t possible, explaining the reason transparently.  

Why it matters: Culture is a leading indicator of resilience. By measuring how workers feel—not just what they do—companies can uncover hidden risks, spot strengths, and act before small issues become big ones. Proactive measurement leads to more adaptive, empathetic, and high-trust workplaces.

Examples of what to track:

• Burnout risk via workload and satisfaction trends
• Psychological safety through feedback norms and voice behaviors
• Belonging through DEI pulse checks or relationship mapping

FW4.2: Turn insight into action

Insight without action erodes trust. That’s why companies seeking certification should not only collect culture data; they must also use it to drive improvement.

Requirements include:

• Developing and documenting a culture improvement plan based on assessment results
• Getting leadership approval and sharing the plan with employees
• Updating it annually to reflect progress
• If participation is low (<50%), including a strategy to boost future engagement 

Sample improvement actions:

• Introduce or enhance employee recognition rituals
• Increase access to mental health or wellbeing resources
• Clarify company values and reinforce them through leadership behavior 

Why it matters: When companies act on what they learn, they build credibility and momentum. This standard prevents performative listening and ensures employees see tangible change from their input. Over time, it builds a culture of responsiveness, accountability, and shared growth.

FW4.3: Disaggregate by gender identity or sex at birth

For companies with 250+ employees, this standard requires that culture data be voluntarily and anonymously disaggregated by gender identity or sex at birth.

Why it matters: Averages can mask inequity. Breaking down data by gender reveals whether everyone in your workforce is experiencing culture equally—and if not, where gaps exist. It’s a critical step toward equity.

Safeguards: Companies must have protections in place to prevent individual identification, especially when disaggregated groups are small.

FW4.4: Disaggregate by one additional social identity

Also required for companies with 250+ workers, this standard calls for a second layer of disaggregation—by race, ethnicity, disability, LGBTQIA+ status, or another identity selected with stakeholder input.

Key criteria:

• Identity categories must be chosen in consultation with stakeholders
• Participation must be voluntary
• Anonymity must be protected 

Why it matters: Culture isn’t one-size-fits-all. This requirement pushes companies to go beyond surface sentiment and uncover meaningful, actionable insights across different identities. It’s a path to deeper inclusion—one that respects diverse lived experiences and equips companies to respond with intention.

Fair Work is a Foundation, Not a Finish Line

The fair work standard and it’s four parts —expectation clarity, fair pay, employee voice, and cultural measurement—aren’t just compliance criteria. They’re building blocks for resilient, values-aligned organizations. Fair Work is a reflection of what a company believes about power, dignity, and responsibility. FW1 – FW4 challenge businesses to treat people not as resources, but as human beings with voices that matter and lives beyond the workplace.

For B Corps, Fair Work is one expression of a broader commitment to stakeholder governance. But its relevance goes beyond certification. When companies center fairness, equity, and transparency in how they treat workers, they help redefine the role of business in society.

Whether you’re just getting started or refining long-standing practices, this guide offers a practical path forward. Each step is a chance to build not only a better workplace, but a more ethical and enduring company.