Frequently Asked Questions

The Living Wage is a voluntary higher rate of base pay. It provides a benchmark for responsible employers who choose to pay their employees a rate that meets the basic cost of living in the UK and London. It is higher than the government's National Minimum Wage rates, including the minimum wage rate for over-25s (the 'National Living Wage') because it is calculated according to the cost of living.  

We don’t publish the Living Wage as an annual salary as the requirement is that the Living Wage is paid for each hour worked.

You can work out the annual salary by calculating LW x hours worked per week x 52.

For example the UK Living Wage as an annual salary might be £8.45 x 37.5 x 52 = £16,477.50 and the London Living Wage as an annual salary might be £9.75 x 37.5 x 52 = £19,012.50

Where a salary calculation is used accredited employers must also ensure that they pay the Living Wage for each hour of over-time worked. 

The rates are announced on Monday of the first week of November each year. Employers should implement the rise as soon as possible and within 6 months. All employees should receive the new rate by 1st May the following year. 

In April 2016 the government introduced a higher statutory minimum wage rate for all staff over 25 years of age, and referred to it as the ‘national living wage’.

The government intends the higher minimum wage rate for over 25s to reach 60% of median earnings by 2020. Current estimates suggest this would mean a rise to around £9 per hour by 2020. 

The government's minimum wage rate is separate to the Living Wage rate calculated by the Living Wage Foundation. Unlike the Living Wage Foundation's rates, it is not calculated according to the cost of living, and is therefore lower than what people need to afford a decent standard of living. 

Full time workers receiving our independently calculated Living Wage earn about £2000 a year more than those on the the governemnt's 'National Living Wage'. This rises to £4000 more a year in London. 

You can read our response to the 2015 budget here.

 

It is illegal to pay staff less than the National Minimum Wage and is punishable by fines of up to £20,000 per worker. 

If you have any questions about the National Minimum Wage or if you are being paid less than the minimum wage then phone the Pay and Work Rights Helpline which is operated by HMRC on Tel 0800 917 2368.

Lines are open from 8.00 am to 8.00 pm, Monday to Friday and 9.00 am to 1.00 pm on Saturday. All calls to the helpline are confidential.

These are the current National Minimum Wage rates:

25 and over21 and over18 to 20Under 18Apprentice*
£7.20 ('National Living Wage') £6.95 £5.55 £4.00 £3.40

 

 

The London rate is calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence about living standards in the capital. It covers all boroughs in Greater London.

The Living Wage applies to everyone over the age of 18

The accreditation is a signed licence between the Foundation and the employer. In order to receive a licence and become accredited please fill in an expression of interest here: http://www.livingwage.org.uk/contact

We will send you a link to an online licence form and a guide to implementing the Living Wage. Once you have ensured your organisation satisfies the requirements please complete and submit the online form. Please note that this will require an online signature.

When we receive your licence and are sure you understand the requirements of being a Living Wage employer, we will process your accreditation. We aim to do this within ten working days, but occasionally the volume of accreditations means this may take us slightly longer. You will then receive a confirmation email welcoming you to our network, along with a copy of our logo to use and other materials to celebrate your commitment.  

It will vary according to the size of your organisation and the types of contracts you have. Some employers can complete their licence form straight away and we will aim to process their accreditation within ten working days. Others may have a project of work to do to identify which contracts are relevant and when they are due for renewal. Large organisations can often be accredited within 6 months.  

The cost varies according to the size of your organisation, starting at £50 per year for those with fewer than 10 employees. For full details of the costs please contact us via the employers form and we will send you a copy of the licence which includes the costs. 

The Living Wage applies to all staff who work regularly on your premises. The exact definition is those who work 2 or more hours a day, in any day of the week, for 8 or more consecutive weeks of the year. The Living Wage does not apply to contractors that supply your organisation with products e.g. stationary suppliers.

We recommend that you communicate your Living Wage commitment to everyone you do business with, and encourage them to consider implementing the Living Wage. 

For the purposes of Living Wage accreditation self-employed workers are treated the same as sub-contracted workers. This means that if they work on your premises for more than two hours for eight consecutive weeks they must be paid the Living Wage. 

This also applies to workers and contractors who do not have a fixed place of work but are part of the core workforce, such as couriers in a delivery company or home care workers.

Further queries may include:

Self-employed workers pay less tax than my directly employed staff, so doesn’t this mean that in practice they will get more than my staff if I pay them the Living Wage?

Self-employed workers have to pay other costs such as holiday and sick pay so we apply the same rate as we would to employees and sub-contracted workers, who pay more in tax but don’t incur these other costs. 

Some of my self-employed staff are paid by outputs not by hours. How can I calculate whether they are being paid the Living Wage?

Self-employed workers should be topped up if their hourly rate works out at less than the Living Wage. Where this is likely to be an issue, we encourage employers seeking accreditation to work with their employee representatives to agree a fair process around this. 

The Living Wage is calculated according to the cost of living in the UK. We are a UK organisation and wages for staff outside of the UK are not covered by the agreement.

We recommend companies consider the international Living Wage guidance provided by the Ethical Trading Initiative

The Living Wage rise only applies to staff whose salary is directly affected by the Living Wage. 

You are not required to offer the same % increase to all staff.

However, many employers choose to maintain pay differentials, particularly for those on lower salary scales. Employers should negotiate with staff and trade unions on pay rises for staff who are not directly affected by the rise in the Living Wage. 

Accreditation does not require employers to break away from nationally agreed pay-scales.

It is possible to keep pay scales in place and pay a top up pay for those in the lower salary brackets that are below Living Wage. 

Accreditation does not include any specific requirements on contract types. However, we will not accredit if there are any concerns about exploitative working practices. 

While zero hours contracts can provide flexibility that works for employers and employees alike, it has been widely reported that the use of zero hours contracts has increased, and in some cases they are being abused. We advise that our employers continually review and manage the use of zero hours contracts and discuss whether there are more suitable options available with staff. Please look to the CIPD's guidance on best practice

 

Employees in receipt of benefits may have their benefits reduced as their wages rise. In the vast majority of cases the benefits will "taper" off. So the employee will not be worse off, just better off by only a small amount

There are no known cases of employees being worse off as a result of receiving the Living Wage for benefits and allowances where there is a ‘taper’ in place.

We are aware that employees receiving Carers Allowance, which does not taper, have the potential to be negatively impacted as a result of pay increases. This will depend on their circumstances. Should this scenario arise we are keen to support employers and staff members by being as flexible as possible.

The last thing that we would want is for anyone to have less money in their pocket at the end of the week as a result of their employer wishing to achieve accreditation.

If any of your staff members are concerned that this would be the case then please speak to your contact at the Living Wage Foundation.

Living Wage accreditation does not require employers to pay the Living Wage to volunteers, apprentices or interns.

Good volunteering programmes can both enrich an organisation making the opportunity available and the individual donating their time (unpaid) as charitable giving. We recommend that all of our employers adhere to government best practice guidance when creating volunteer placements. 

Statutory apprentice wages are lower than the minimum wage as a contribution to the cost of training, particularly in the earlier stages where apprentices may spend more time training than working. For the same reason we do not require apprentices to be paid the Living Wage. However, it is good practice to ensure pay rises over the course of the apprenticeship, and many accredited employers have chosen to extend the full Living Wage to apprentices. 

Many paid internships provide valuable work experience and training for young people starting out in their careers. However, there is increasing concern about the use of unpaid interns to carry out the regular work of employees. 'Intern' is not a recognised legal term and some unpaid interns may actually be workers and therefore entitled to the minimum wage. Employers using interns should have an internal policy statement and follow the governement's best practice guidance relating to the minimum wage, work experience and internships. 

https://www.gov.uk/employment-rights-for-interns

 

https://www.gov.uk/apprenticeships-guide 

The Living Wage applies to all staff who work regularly on your premises. The exact definition is those who work 2 or more hours a day, in any day of the week, for 8 or more consecutive weeks of the year. The Living Wage does not apply to contractors that supply your organisation with products e.g. stationary suppliers.

We recommend that you communicate you Living Wage commitment to everyone you do business with, and encourage them to consider implementing the Living Wage. 

In order to be accredited an employer must pay all directly employed staff the Living Wage and have an agreed plan in place for third party contracted staff such as contracted catering, cleaning, security, parks or ground staff. Where contracted staff cannot be moved onto the Living Wage immediately, organisations can choose to roll out the Living Wage across third party contracts over time, as the contracts come up for renewal. This is called phased implementation. The contracts are included in the licence agreement as 'milestones'. The Foundation will check in with you periodically to ensure the milestones are on track. 

You should let your existing and any new contractors know that you have decided to become a Living Wage employer as soon as possible. We can provide a sample letter if you become accredited. 

You should approach positively from the point that you are a client that requires a service and the service you require is Living Wage staff. Your contractors may have heard of the Living Wage, but if they have not you can send them some of our information or direct them to the website. 

They might be interested in our Service Provider Recognition scheme. 

Phased implementation means that you can roll the Living Wage out across contracts as they come up for renewal.

If you have a contractor who refuses to work with you on the Living Wage, you can be accredited now and use your next tender process to find one who will.

Yes. Employees transferred under the Transfer of Undertakings (Protection of Employment), or TUPE, regulations should be paid at least the Living Wage in line with your other employees. 

The licence requires that all those employees who work on your premises for 2 or more hours a day, in any day of the week, for 8 or more consecutive weeks must be paid the Living Wage. So technically you have up to a maximum of 8 weeks to implement the pay increase.

In order to be accredited an employer must pay all directly employed staff the Living Wage and have an agreed plan in place for third party contracted staff such as contracted catering, cleaning, security, parks or ground staff. Phased implementation means that the Living Wage is rolled out across third party contracts over time, as the contracts come up for renewal. These contracts are included in the licence agreement as 'milestones'. The Foundation will check in with you periodically to ensure the milestones are on track. 

All staff that work on your premises for 2  hours or more a day, in any day of the week, for 8 or more consecutive weeks of the year must be paid the Living Wage.

You may have cleaners that work on your premises, that are shared with other tenants. This first step is to find out from your building management company whether the cleaners are paid the LW.

If they are not then the ideal outcome would be to persuade your building management to pay all cleaners, security and reception staff the LW. You might want to organise a meeting of tenants in the building and raise the issue of the LW with this group. If you can get support from a group of tenants and then approach the building manager together you will have a more powerful case for persuasion.

If it is not possible to persuade other tenants and building manager to work with you on the Living Wage then you can request to pay the staff the Living Wage rate for the time they are providing a service on your premises. As you are a paying client the building manager should be willing to provide you with a service agreement on the terms you require.

 

Only guaranteed non-deferred payments can be included in the Living Wage rate.

This means guaranteed bonus payments can be included. Examples of guaranteed bonuses are a time away from home allowance, or an inner city weighting allowance. Non-guaranteed payments such as productivity or sales related bonuses cannot be included.

No, the Living Wage does not include non-cash goods.

 

No. Only guaranteed non-deferred payments can be included. A pension is a deferred payment and so does not help the employee with the cost of living at the current time.

Employers Guide