If you’re a small business owner and employer based in London, then there’s a good chance you’ve already heard of the London Living Wage (LLW). In this article we’ll go over the basics and how it affects you – if at all.
What is the London Living Wage?
The UK Real Living Wage is a voluntary pay rate set up in 2001 by Citizens UK and paid by over 15,000 employers across the UK. It’s based on the actual cost of living, with the current rate being £12.60. The London Living Wage rate follows the same basic principle, but it’s slightly higher at £13.85 owing to the higher living costs in the nation’s capital.
The general aim is to try and end in-work poverty by encouraging as many businesses as possible to become accredited Living Wage Employers. Currently, 16% of people working in London (around half a million) earn less than the London Living Wage, and this shows just how real the problem is.
Will the London Living Wage increase?
In short, yes. Unlike the government’s national minimum wage rate, it recognises the steep increase in the cost of living across the country, and especially the higher costs for those who live and work in the capital. As such, it will always strive to keep pace with the cost of living, whatever that may be.
Is the London Living Wage voluntary?
Yes, the London Living Wage is entirely voluntary, meaning employers aren’t legally obliged to pay it and must choose to opt in themselves.
There are now more than 4,000 organisations headquartered in London that are Living Wage accredited, which is certainly a step in the right direction.
What are the benefits of paying my employee the London Living Wage?
First and foremost, doing so demonstrates that you want to do business the right (or fair) way and care about the people who work for you. A side effect of this is that you will appear more attractive to potential employees, and will therefore be able to attract higher quality candidates.
A happier, more productive workforce also tends to produce better results, and so your business will actually thrive as a result of making sure everyone in it is adequately cared for.
It really is a win-win, as well as being the “right” thing to do.
You can also expect better retention rates, in addition to better brand awareness in general.
Do London Living Wage employers receive support?
Yes, the Living Wage Foundation (LFW) offers support and guidance to employers who make the choice to become accredited, and so you needn’t worry about not knowing what to do or getting things wrong.
If you believe in the initiative but aren’t necessarily in a position to partake, you can actually apply for a London Living Wage business rates grant. This will vary depending on the size of your business or organisation, as well as the number of years you are committing to being accredited with the LWF.
The maximum grant size covers accreditation costs for seven years, with smaller grants covering five and three years also available.
There are certain eligibility conditions to be aware of:
- You need to provide evidence that your business or organisation is in fact based where you claim it’s based. This location will be different depending on who you’re applying to for the grant (e.g. the London Borough of Southwark)
- Your business/organisation must have a minimum of two employees and no more than 250 employees
- Branches or local chapters of large organisations are not eligible unless they are separately registered
- You must be able to provide a registered bank account (for business use, not personal)
- Completion of a Subsidy Declaration Form
In order to apply for a grant, you simply need to complete and send off the application form, which can be found online.
How do I become a Living Wage employer?
You’ll need to demonstrate your commitment to the cause by adopting its core principles – which of course means paying all of your directly employed staff a Living Wage. You should also have a plan in place to eventually include regular sub-contracted staff as well. The accreditation itself is essentially just a signed licence between the Foundation and yourself.
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