What is the Living Wage Foundation?

What is the Living Wage Foundation?

The Living Wage Foundation is a UK-based organisation that campaigns for and promotes the concept of a real Living Wage. This is a wage that enables workers to afford a basic standard of living. The real Living Wage is calculated based on the cost of living and takes into account factors such as housing, food and transport.

The real Living Wage is calculated based on the cost of living in a particular geographical area. This means that the real Living Wage varies depending on where a worker lives in the UK. For example, the real Living Wage in London is currently £11.95 per hour, while the real Living Wage in the rest of the UK is £10.90 per hour. This reflects the higher costs of living in or working in the capital.

“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-23s (the 'National Living Wage') because it is calculated according to the cost of living.” (Living Wage Foundation)

Real Living Wage rates are calculated and published annually and the last increase was announced on 22nd September 2022. Employers were encouraged to implement the new real Living Wage across their workforce as soon as the rates were announced, but at the latest by 14th May 2023.

The real Living Wage is non-legally binding. It aims to be a wage that meets employees’ everyday needs, covering workers’ realistic costs of living. Employers who pay the real Living Wage are deemed to go ‘above and beyond’ for their employees.

Why does the Living Wage Foundation exist?

The Living Wage Foundation was established in 2011 and is an independent organisation that’s supported by a range of businesses, organisations and individuals. Its primary aim is to encourage employers to pay their workers the real Living Wage, rather than the National Minimum Wage.

One of the key reasons why the Living Wage Foundation exists is to address the issue of in-work poverty. Despite being employed, many people in the UK struggle to make ends meet and live in poverty. This is often because they are paid the minimum wage or just above it, which is not enough to cover basic living costs. With the UK currently experiencing a cost-of-living crisis, more employees than ever are under extreme financial pressure.

By encouraging employers to pay the real Living Wage, the Living Wage Foundation aims to help workers out of poverty and create a more equitable society. It also believes that paying a Living Wage is good for businesses, as it can increase productivity, reduce absenteeism and improve staff retention by showing them that they’re valued.

What’s the difference between the real Living Wage, the national Living Wage and the National Minimum Wage?

The real Living Wage is calculated based on the cost of living in a particular area and takes into account factors such as housing, food, and transport. This means that the real Living Wage  depending on where a worker lives in the UK. For example:

- the real Living Wage in Greater London is currently £11.95 per hour

- the real Living Wage in the rest of the UK is £10.90 per hour

The real Living Wage is different to the government’s national Living Wage and National Minimum Wage (‘NMW’). These are rates of pay that must be paid, by law, to any employee who’s over school-leaving age. The following rates apply from 1st April 2023:

- The national Living Wage applies to all employees over 23 years of age and is £10.42 per hour. There is no London weighting.

-The National Minimum Wage applies to all employees of 22 and under, over the school leaving age. There is no London weighting.

Different rates apply based on the employee’s age:

- NMW for Under 18s is currently £5.28 per hour

- NMW for those aged 18-20 is £7.49 per hour

- NMW for those aged 21-22 is £10.18 per hour

How many employers pay the real Living Wage?

The Living Wage Foundation has been successful in its campaign to encourage employers to pay a real Living Wage. As of March 2023, over 12,000 UK employers are registered Living Wage employers, including household names such as Ikea, Nationwide, Chelsea Football Club, Nationwide, Google, Everton Football Club and Aviva. This means that these companies have committed to paying all of their staff, including subcontractors, the real Living Wage or above.

The Living Wage Foundation also works with local authorities and other organisations to promote the real Living Wage and encourage more employers to pay it. It provides advice and support to employers who are interested in becoming real Living Wage employers and offers a range of resources and tools to help them implement the real Living Wage.

How do I become an accredited Living Wage employer?

To become an accredited Living Wage employer, businesses must firstly ensure that all their employees plus subcontractors are paid £10.90 per hour or above for outside Greater London and £11.95 or above per hour inside Greater London.

The Living Wage Foundation quotes a minimum hourly rate, rather than an annual salary, as the requirement is that the real Living Wage is paid for each hour that’s worked. When a salary calculation is used, accredited employers must make sure that the real Living Wage is paid for any overtime that’s worked by the employee.

Once a business ensures that all their employees are paid equal to or above the real Living Wage, they can fill out an enquiry form and the Living Wage Foundation will send a link to an online licence form that the employer should complete. A fee applies for the application and accreditation usually takes around 10 days to complete.

The cost of the accreditation varies according to the size of the organisation that’s applying. The fee starts at £60 per year for businesses with fewer than 10 employees.

Is PayCaptain a real Living Wage employer?

Yes. PayCaptain is committed to making sure employees are paid fairly for the work they do and that they can meet their financial commitments. PayCaptain was founded on the principle of improving employees’ financial wellbeing and this applies to PayCaptain employees as well as the employees of PayCaptain’s customers.

Whilst PayCaptain employees are salaried, the company ensures that the hourly rate of pay for all employees, including any overtime that may be worked, is above the real Living Wage.

PayCaptain is delighted to work with other accredited Living Wage employers. Accredited real Living Wage businesses that are customers of PayCaptain include DiSRUPT (formerly EllisKnight); DF Capital; Cotswold Fayre; Vivobarefoot; The Social Innovation Partnership and Farewill. We’re also working with an abundance of other clients so that they can become accredited.

For the full list of accredited real Living Wage employers in the UK, click here.    

How does PayCaptain help?

PayCaptain can help employers in the accreditation process as a Living Wage employer by providing a suite of reports that give a clear view of hourly rates across all employees in the business. This can include exception reports to make sure that no employees slip through the net.

PayCaptain’s technology enables bespoke reports to be created with live data on any field in the system. Reports can be simple multi-column or grouped into areas such as department, location or job title. Comparisons can be made against other reports and filters can be applied to condense data or look backwards or forwards in time.

Dashboards can also be built, amalgamating report summaries into a graphical representation to quickly analyse data. These reports and dashboards can be built by the client themselves or with assistance from the expert team at PayCaptain.

PayCaptain can also help businesses when the rates change annually by automatically updating them and applying London weighting where applicable.

In summary, the Living Wage Foundation plays an important role in promoting the real Living Wage in the UK. By encouraging employers to pay their workers a living wage, it aims to reduce in-work poverty and create a more equitable society. Its success in encouraging over 12,000 UK employers to become living wage employers is a testament to the importance of its work


PayCaptain Payroll Solutions Limited, www.paycaptain.com is a multi-award-winning HR/FinTech company that delivers a fully automated cloud outsourced payroll service. The solution contains many unique and innovative features for employees, helping them to take control of their pay and increase their financial wellbeing.

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