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 more than the National Minimum Wage. 

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 for 8 or more consecutive weeks of the year. The Living Wage does not apply to contractors on the supply side e.g. stationary suppliers.

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

The accreditation does not require employers to pay the Living Wage to volunteers, apprentices and interns. Although we recommend it as best practice for employers who can afford to do so. Many accredited employers have chosen to extend the requirement to apprentices and interns.

Good volunteering programmes can both enrich the 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. 

Employers should also be mindful of government best practice guidance relating to the National minimum wage: work experience and internships.

Employers using interns should have an internal policy statement and follow best practice guidance from government. Intern is not a recognised legal term and some interns may actually be workers and therefore entitled to the national minimum wage. 

For further information you might also like to visit the Intern Aware website. 

We don’t publish the LW 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 £8.25 x 38 x 52 = £16,302 and the London Living Wage as an annual salary might be £9.40 x 38 x 52 = £18,570.40

Where a salary calculation is used the Living Wage must also be paid for each hour of over time worked. 

The London rate is set annually by the Living Wage Foundation and calculated by the Greater London Authority, it covers all boroughs in Greater London.

The Living Wage applies to everyone over the age of 18

The rates are announced on the first Monday 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. 

The accreditation is a signed licence between the Foundation and the employer. In order to be accredited you must pay all your directly employed staff the Living Wage and have a plan in place for contracted staff. 

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. It will only take a few minutes and helps us to monitor the types of employers looking at the Living Wage and the types of enquiries that the FAQs should cater for. 

It varies according to the size of your organisation and according to the types of contracts you have. Some employers can sign up straight away; others may have a project of work to do to identifying which contracts are relevant and when they are due for renewal. Large organisations can often be accredited within 6 months.  

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. 

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. 

We recommend that you get contractors on board by communicating your intentions to them at the earliest opportunity. How you do this will depend on how many contractors you have and your capacity to engage them.

Many contractors will have heard of the Living Wage and may already pay it on their other contracts. If not, direct them to our website to read up.

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.

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 for 8 or more consecutive weeks of the year. The Living Wage does not apply to contractors on the supply side e.g. stationary suppliers.

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

All staff that work on your premises for 2 or more hours a day 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 any 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.

If you are struggling don't hesitate to get in touch with us for guidance. 

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.

If you are unsure don't hesitate to get in touch.

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.

We expect accredited employers to use Zero Hour contracts responsibly.

Zero Hour contracts can benefit an organisation managing unpredictable staffing levels. They also provide a flexible opportunity for people to earn while managing demanding personal commitments or more than one career.

It has been widely reported that the use of Zero Hour contracts has increased and that in some cases they are being abused. We advise that our employers continually review and manage the use of Zero Hours contracts. Please look to the CIPD’s advice for best practise. Improving transparency will help to make sure a worker understands their rights and expectations before their first shift.

The Department for Business, Innovation and Skills carried out a consultation on Zero Hour contracts in 2014. The result of this was that exclusivity clauses in Zero Hours contracts were outlawed by the Small Business, Enterprise and Employment Bill 2014-15.

Employers who use Zero Hours contracts should consider whether Zero Hours remains the best option and what other options are available if the law is changed to further restrict their use.

 

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 far 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

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. 

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.

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.

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. 

Employees TUPE’d over should be paid the LW as soon as possible.

The licence requires that all employees who work for 2 or more hours a day for 8 or more consecutive weeks must be paid LW. So technically you have up to a max of 8 weeks to implement.

These are the current national minimum wage rates.

Year 21 and over 18 to 20 Under 18 Apprentice*
2015 (current rate) £6.70 £5.30 £3.87 £3.30

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, Saturday.

All calls to the helpline are confidential.

 

In July 2015 the Chancellor of the Exchequer announced that the UK Government will introduce a compulsory minimum wage premium for all staff over 25 years of age, and referred to it as the ‘national living wage’.

The government rate will be introduced in April 2016. 

The government has instructed the Low Pay Commission that the minimum wage premium for over 25s  should reach 60% of median earnings by 2020. 

This would mean a rise to around £9 per hour by 2020. 

The government rate is separate to the Living Wage rate calculated by the Living Wage Foundation. 

The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living. 

You can read our response to the 2015 budget here.

 

Employers Guide