Good Business Charter real living wage feature image

Real living wage

The GBC requires all employers to pay directly employed staff and regular contracted staff the real living wage as set out by the Living Wage Foundation.

What it is

The real living wage is a UK wage rate that is voluntarily paid by UK businesses who believe their staff deserve a fair day’s pay for a hard day’s work.

In 2016 the government introduced the National Living Wage. This is not a living wage as it isn’t calculated based on actual living costs.

The current real living wage (as of November 2020) is £9.50 across the UK and £10.85 in London.

Why it matters

Low paid workers who receive the real living wage find they do not need to worry about affording the basics, and can even potentially save a little. Together with the Living Wage Foundation, we believe it is fair pay for hard work.

The Living Wage Foundation reports that living wage employers have found that being accredited improves the reputation of their businesses and differentiates them from others in the industry.

They have found that it increases motivation and retention rates for employees. It also improves relations between managers and their staff.

Regularly contracted workers

Regularly contracted workers are defined as those who work regularly, for 2 hours or more a week, for 8 or more consecutive weeks a year.  We believe it is really important to include regularly contracted workers in this requirement to avoid the risk that companies paying real living wage end up contracting out more work because it is cheaper when the only reason this is the case is because wages are below the real living wage.  The most common roles where this can occur are cleaners, drivers and security guards.

(NB. A small business may have contracted cleaners through a third party, that clean an entire building, so in this situation the wages should be topped up when they clean your offices to ensure you are compliant with this requirement).

Apprentices are not included in the requirement to pay real living wage in recognition of the contribution to the cost of training which is why statutory apprentice wages are lower than the minimum wage.  However, many accredited employers have extended the real living wage to their apprentices also.

Bonuses and commission

If you pay a basic weekly wage which is below the real living wage but there is a combination of bonuses/tips/profit-share/commission based on your actual sales, then you can still commit to the real living wage as long as the monthly amount that each employee receives reaches the minimum real living wage amount for the hours they have worked.  Where the monthly amount based on base pay plus any extra payments doesn’t reach this level, there is an expectation that you would pay the additional amount to bring it up to the equivalent of real living wage for that month.

Smaller organisations

For companies with up to 50 employees we have developed a streamlined version of the accreditation in collaboration with Federation of Small Businesses.  Please find more information about this and the questions you will be asked here: https://www.goodbusinesscharter.com/streamlined-version-FSB/

Self-certification for organisations with over 50 employees

To receive Good Business Charter accreditation, businesses will be asked they pay real living wage to their directly employed and regularly contracted workers, and if they have more than 50 employees, to become an accredited living wage employer. If they are not currently living wage employers, they will be expected to contact the Living Wage Foundation within three months of signing up to the GBC to confirm their commitment and a timeframe for accreditation. This will include a plan with annual milestones for rolling out across contractors over an agreed timeline (including franchisees’ employees where relevant). 

Although signatories to the real living wage commitment will be entitled to use the GBC logo and will be accredited by them, the LWF logo will only be allowed to be used once companies complete their accreditation with the LWF. If a company fails to contact the LWF or follow through on its commitments to become an accredited Living Wage employer within an agreed timeframe, it forfeits the right to be a signatory of the Good Business Charter. 

The Good Business Charter team will work closely with the Living Wage Foundation to ensure companies fulfil their commitments to contact the Living Wage Foundation and begin the accreditation process. 

Costs 

There are costs associated with Living Wage Foundation accreditation but these are kept low and we hope they will not be a barrier to GBC accreditation.  They are as follows (2020): 

£60 – sole trader up to 10 employees            £120 – up to 50 employees 

£240 – 50-250 employees                                £400 – up to 500 employees 

£500 – cap for public sector                            £3,000 – 500 + employees, private sector 

The Living Wage Foundation has offered a 20% discount per year for new members who are accrediting with them as a result of seeking GBC accreditation. 

For more information please see https://www.livingwage.org.uk/ 

In exceptional circumstances the Good Business Charter may accredit an organisation without them being required to officially join the Living Wage Foundation as Living Wage Employers on the strict condition that they do meet the condition to pay all directly employed workers, franchise employees (when relevant) and regularly outsourced contractors the real living wage.  Such a situation may arise where the LWF takes a stance on a particular situation that represents a higher threshold than the GBC considers necessary, for example treatment of interns where other benefits are afforded them alongside their wages. 

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If you have reason to believe that a GBC accredited organisation is not meeting its obligations, please let us know.