Living Wage: Why Looking After Your People Can Strengthen Your Business

You recruit someone, train them and help them settle into the team.

They learn your systems. They get to know your customers. Other people begin to rely on them.

Then they leave for a similar job that pays more.

The recruitment process starts again. Managers spend time interviewing. Colleagues cover the gap. Another new starter needs support before they can work confidently on their own.

When this happens repeatedly, it is worth asking what is making people leave.

Pay may be part of the answer.

For an employee trying to cover rent, food, travel and childcare, a difference in hourly pay can matter a great deal. A friendly team and a thank-you from the manager are valuable, but everyday bills still need paying.

The benefits of paying the real Living Wage begin with the people receiving it. They can also extend into the business through stronger working relationships, better recruitment and greater stability.

Understanding that connection helps employers make thoughtful decisions about pay and the wider experience of working for them.

What is the real Living Wage?

The real Living Wage is a voluntary rate of pay based on the cost of living. It is independently calculated and updated each year, with one rate for the UK outside London and a higher rate for London.

It is different from the government’s National Living Wage, which is a statutory minimum wage rate. Despite their similar names, they are separate measures with different purposes. Living Wage Foundation

Employers must meet the legal minimum wage requirements that apply to their workers. Paying the real Living Wage is a further commitment.

It provides a benchmark linked to what people need for everyday living costs.

That does not mean everyone’s household circumstances are the same. Housing, caring responsibilities and working hours all affect someone’s finances. The rate is a shared benchmark rather than a promise that every personal financial difficulty will disappear.

For employers, it offers a clear starting point when considering whether the lowest rates of pay in the business reflect the cost of living.

What being a Living Wage Employer means

Being an accredited Living Wage Employer involves a formal commitment through the Living Wage Foundation.

The Foundation’s guidance covers directly employed staff and requires an agreed plan to extend the commitment to eligible regular third-party contracted workers. Businesses should check the current criteria for their workforce and contracts, including any specific exclusions or arrangements. Living Wage Foundation

This matters because the people supporting a business are not always all on its payroll.

A cleaner may arrive before the office opens. A security worker may remain after everyone else has gone home. Catering staff may keep a busy workplace running throughout the day.

Their contribution can be easy to overlook when pay decisions focus only on direct employees.

Accreditation encourages employers to consider the relevant contracted roles too.

It also turns a broad statement about fair pay into a defined commitment. That gives employees, job applicants and customers something concrete to understand when the business describes itself as a responsible employer.

Why pay deserves a place in wellbeing discussions

Businesses often put effort into staff wellbeing.

They may offer support services, organise team activities or encourage people to take breaks. These can all have value.

Pay should be part of the same conversation.

Consider an employee who has enough to meet their usual bills but little left for an unexpected expense. A broken appliance or urgent journey could create a difficult choice.

A higher rate of pay may give that person more room to manage everyday life. It may also make it easier to plan rather than constantly decide which payment can wait.

Employers should avoid assuming that they know someone’s financial circumstances. They should also avoid expecting workers to share private details to justify fair treatment.

Reviewing pay provides a way to act without asking people to explain their personal hardship.

It recognises that financial security is relevant to wellbeing, alongside the working environment, management support and the demands of the job.

What research tells us about business benefits

There is evidence that accredited employers see benefits from paying the real Living Wage.

A 2021 survey carried out with Cardiff Business School received responses from 1,532 accredited Living Wage Employers. The Foundation reports that 94% of respondents had benefited from accreditation, while 60% reported improved retention of employees receiving the Living Wage. Living Wage Foundation

These findings are useful, but they need to be read carefully.

They describe the experiences reported by surveyed employers. They do not guarantee the same result for every business or prove that a pay change alone caused every improvement.

Sector, management, working conditions and local recruitment pressures all affect outcomes.

The research gives employers a reason to consider the potential benefits. The next step is to examine their own workplace.

Where are vacancies hardest to fill? Why do people leave? What does staff turnover cost? What are employees saying about pay and the wider experience of working there?

Those questions turn a general business case into something relevant to your organisation.

Keeping experienced people can protect business knowledge

When an experienced employee leaves, the business loses more than a name on the rota.

It may lose someone who knows how to resolve a common customer problem, spot an error in an order or help a new colleague through an unfamiliar task.

Some knowledge is written down. Much of it develops through doing the work.

Paying the real Living Wage may help make staying a more attractive option, particularly where people are weighing up similar jobs.

The business can then benefit from keeping skills and experience for longer.

This does not mean employees owe an employer permanent loyalty because it pays fairly. People leave for many valid reasons, including career development, family needs and a change of direction.

The practical point is to remove an avoidable reason for leaving where possible.

If someone enjoys the work and feels supported but cannot manage on the pay, the business may lose a capable person it would otherwise have retained.

Look at the full cost of staff turnover

A wage bill is visible. The cost of repeatedly replacing people is often spread across several budgets and working days.

There may be recruitment advertising, agency fees and time spent reviewing applications. Managers need to interview candidates and arrange the appointment.

After that comes induction, training and supervision.

Meanwhile, colleagues may cover work, adjust their hours or take on extra responsibilities. Customer service can become less consistent while a new starter learns the role.

These costs will vary by business. Some are straightforward to calculate; others need a reasonable estimate.

The important step is to include them when reviewing pay.

A lower hourly rate may appear cheaper while creating costs elsewhere. Equally, employers should not assume that a pay increase will recover its full cost through reduced turnover.

Build the business case using actual information. Compare payroll changes with realistic estimates of recruitment and replacement costs, and check what happens over time.

That provides a stronger basis for decisions than looking at wages alone.

Fair pay can make recruitment more attractive

A job advert asks someone to imagine their life in your business.

Applicants want to understand the work, the hours, the location and what they will earn. Clear information helps them decide whether the role is suitable.

Being a Living Wage Employer can support that decision by showing a defined commitment to pay.

It may be especially relevant when candidates are comparing similar roles with different employers.

However, the rest of the advert still matters. A fair hourly rate does not explain whether hours are guaranteed, how shifts are arranged or what travel the role involves.

Give people enough information to assess the whole job.

Be clear about pay rather than relying on phrases such as “competitive salary”. Explain the working pattern and any important conditions.

Recruitment is more useful when suitable candidates understand what they are applying for. It reduces the chance that someone discovers a basic mismatch only after interviews, an offer or their first week at work.

Fair pay can strengthen trust between staff and managers

Employees hear what a business says about its values. They also experience how those values affect decisions.

If leaders say that people matter, workers may reasonably look at pay, workload and everyday treatment for evidence.

A commitment to the real Living Wage can help make that message more credible.

It gives managers something specific to explain when discussing how the business approaches its lowest rates of pay.

Trust still depends on what happens afterwards.

Payroll needs to be accurate. Questions should receive clear answers. Workers should feel able to raise a concern without being dismissed.

A business can weaken trust if it celebrates its commitment publicly while employees struggle to resolve basic pay problems.

Treat the commitment as part of the employment relationship. Explain it clearly, apply it consistently and make it easy for people to ask questions.

The value comes from what employees experience, as well as what appears on the company website.

How greater stability may support customers

Customers often notice the effects of staffing changes without knowing the cause.

They may have to explain their needs to another new person. A familiar contact may disappear. A task may take longer because someone is still learning the process.

Where fair pay helps a business retain people, it may also support more consistent service.

Experienced employees can build relationships, understand recurring needs and handle routine work with confidence. Teams may spend less time repeatedly rebuilding their knowledge.

This is a possible link between pay and business performance, rather than a guaranteed outcome.

Good service also needs suitable staffing levels, training, clear processes and effective management.

Paying the real Living Wage should sit alongside those arrangements.

For employers reviewing customer complaints or delays, it can be useful to ask whether staffing instability is contributing. If it is, understand the reasons behind that instability before choosing a response.

Pay may be one part of an improvement plan, alongside changes to the way work is organised.

A practical example of reviewing pay and retention

Imagine a small service business with a team of customer support staff.

This is an illustrative example, rather than a claim about a particular company.

Several employees leave within a year. Exit conversations suggest that some liked the work but found better-paid roles nearby.

Managers review the pay rates alongside recruitment spending and the time needed to train replacements. They also speak with current staff about working hours, support and opportunities to develop.

The business decides to increase its lowest rates to the real Living Wage. It improves induction and makes the route for pay questions clearer.

Over the following year, managers review staff turnover, recruitment and feedback.

If retention improves, they consider the whole set of changes. They do not assume the pay rise explains every result.

This approach helps the business learn. It combines a clear commitment to employees with a practical review of how the workplace is functioning.

Pay needs to sit alongside secure and manageable work

An hourly rate is important, but it does not tell someone what they can rely on earning.

A worker with very few hours may still find their income difficult to manage. Someone whose shifts change at short notice may struggle to arrange childcare or transport.

That is why employers should consider hours and working patterns alongside pay.

The Living Wage Foundation offers a separate Living Hours accreditation focused on security of hours and working arrangements. Living Wage accreditation itself does not establish every aspect of job quality. Living Wage Foundation

Even without pursuing another accreditation, a business can review how it plans work.

Are hours clear? Do people receive useful notice of changes? Are workloads manageable within the time available?

Ask employees what causes difficulty rather than assuming the answer.

A fair rate has greater practical value when people can understand their working pattern and plan around it. This also helps managers recognise where scheduling practices may be creating problems that pay alone cannot solve.

Remember the people working through contractors

Contracted workers can be part of the daily life of a business while having a different employer.

They may work closely with your team, use your premises and support your customers. Yet their pay arrangements may be outside the direct knowledge of your managers.

Start by identifying the contracts that are relevant to the Living Wage commitment.

Speak with suppliers about the workers involved, the current arrangements and what would be needed to meet the applicable criteria.

Do this early enough for a useful discussion. Contract costs, renewal dates and responsibilities may all affect the plan.

Avoid assuming that a low contract price leaves room for higher pay without any changes. Ask how the service is being delivered and what the proposal means for workers.

A clear agreement is easier to manage than a vague assurance.

The aim is to understand how your purchasing decisions connect with the pay of people supporting the business, and to follow the agreed commitment through.

Build a realistic financial plan

For many employers, the main question is how to make a higher rate of pay sustainable.

That deserves a careful answer.

Begin with an accurate picture of current pay and working hours. Identify which roles would be affected and calculate the direct increase.

Then consider associated employment costs and the possible effect on the wider pay structure.

If the lowest rate moves closer to that of an experienced team leader, for example, the business may need to review how it recognises different levels of responsibility.

Include the relevant supplier costs and accreditation fees where applicable.

Use realistic assumptions about potential benefits. Lower recruitment spending may be possible, but it should not be counted as a certain saving before there is evidence.

Consider different scenarios and make sure decision-makers understand them.

The purpose of planning is to support a commitment the business can maintain. A well-understood decision is easier to explain to employees and include in future budgets.

Communicate the commitment clearly

Employees should understand what the real Living Wage means for them.

Explain the rate that applies, who is covered and when any pay change will take effect. Give people a clear contact for questions.

Keep the language simple. Workers should not need to understand accreditation terms to check their own pay.

Where someone already earns above the real Living Wage, explain how the commitment fits within the wider approach to pay. Avoid suggesting that accreditation settles every question about progression or salary levels.

Public communication should be equally clear.

If your business is accredited, use the Living Wage Employer mark in line with the Foundation’s guidance. Describe the commitment accurately without extending it into claims about matters the accreditation does not cover.

A clear message helps people understand the decision. It also gives managers a consistent explanation, reducing the chance that different teams receive conflicting information.

Review whether the commitment is working in practice

The annual rate update is a useful prompt to check your arrangements, but it should not be the only review.

Look at whether pay changes reached the relevant workers and whether payroll information is accurate.

Check progress on agreed contractor arrangements. Make sure someone owns the follow-up.

Then consider the broader experience of employees.

Are people staying longer? Are recruitment difficulties changing? What do staff say about pay, working hours and management support?

Use information carefully, especially in small teams where individual responses may be easy to identify.

Compare results over a sensible period. A single resignation or unusually busy month may not tell you much about a lasting pattern.

The purpose is to understand whether the business is meeting its commitment and where further improvements are needed.

Accreditation provides a defined benchmark. Your ongoing review helps connect that benchmark with the reality of working in the organisation.

What this means for Compliant

At Compliant, we are a Living Wage Employer.

That commitment reflects the importance of looking after the people who contribute to the business.

We know that organisations depend on people’s knowledge, effort and judgement. Those contributions deserve consideration when leaders make decisions about pay and the working environment.

Being a Living Wage Employer is one way to put that principle into practice.

It also gives us a reason to talk about fair pay as part of responsible business management.

Policies and processes are shaped by people. Customer relationships depend on people. Improvements often begin because someone has noticed a problem and taken the time to raise it.

Looking after employees supports the conditions in which those contributions can continue.

Every business will have its own circumstances, but the underlying question is relevant to all employers: how do the decisions we make affect the people we rely on?

Start with a clear view of your own workplace

You do not need to begin with a public announcement.

Begin by understanding the current position.

Review your lowest rates of pay, the hours people work and the relevant contracted services. Check the latest Living Wage Foundation guidance and compare it with your arrangements.

Look at recruitment and staff turnover too. Read exit feedback, speak with managers and give employees a suitable way to share their views.

Bring that information into the same discussion.

The benefits of paying the real Living Wage may include better retention, stronger recruitment and greater trust. The people receiving it may gain more room to manage everyday costs.

Those are worthwhile reasons to examine the decision carefully.

Fair pay works best as part of a wider commitment to treating people well, supported by realistic planning and consistent action.

This month, ask whether your approach to pay reflects the people your business depends on. What would you need to understand, review or change to give a confident answer?