Living Wage

An increasing number of tenders issued by public bodies are incorporating requirements into contracts awarded for suppliers to pay their staff the living wage. This is currently set at £8.55 per hour for those in London and £7.45 for those outside London. The national minimum wage is currently £6.19 per hour. A lot of companies have contacted me to ask whether public bodies can legally include this term within contracts.

The simple answer to this question is yes, they can. However, it is never that straightforward. Public bodies need to consider this on a case by case basis and the requirement should apply to all bidders equally. Further, the European Commission clarified this issue as far back as 2009, when it stated that “living wage conditions must concern only the employees involved in the execution of the relevant contract, and may not be extended to other employees of the contractor.” The requirement to pay the Living Wage should be clearly indicated either in the OJEU notice or the tender documentation, there should be no surprises at contract award stage.

The Living Wage Foundation has conducted research amongst those businesses who have committed to pay the living wage to determine the benefits. They include: staff leaving rates fell by 25%, 54% of employees felt more positive about their work place and companies stated that it had enabled them to attract new business and customers.

So, if you see a contract advertised with a living wage requirement, don’t dismiss it as out of hand. There are clear business benefits to paying the living wage, and it may increase your chances of securing new contract successes.

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