How to become a Living Wage and Living Hours Employer

Confused between the National Living Wage and the real Living Wage? Don’t worry, we’ll break it down for you. The National Living Wage is a statutory minimum set by the UK Government for employees aged 21 and over. The real Living Wage is a higher, voluntary rate set by the Living Wage Foundation for employees and contractors aged 18 and over. It’s paid by over 16,000 UK employers who believe their staff deserve a wage that reflects their actual cost of living. To date, the real Living Wage campaign has helped almost half a million people get a pay rise that’s transformed their lives.

Quality Company Formations has been a Living Wage Employer since 2019, so we know first-hand that accreditation can seem like a daunting prospect. Like many businesses, we didn’t know until we started our research that the process can be very simple for smaller businesses and take just 10 days to complete.

In this guide, we’ll help to put your mind at ease with clear explanations of what the real Living Wage is and how it differs from the National Living Wage. You’ll learn why it’s worth becoming a Living Wage Employer as well as a Living Hours Employer and get step-by-step instructions for a quick and easy accreditation process.

What is the real Living Wage?

The real Living Wage is an hourly rate set by the Living Wage Foundation that employers can voluntarily commit to paying employees aged 18 and older. As the name suggests, it’s based on the actual cost of living – the idea being that staff earn a wage they can genuinely live on.

Every year, the real Living Wage is independently calculated based on what people are currently paying for things like food, bills, rent, and other monthly essentials. When the prices of these things go up, so does the real Living Wage. The Living Wage Foundation also takes location into account, setting a higher rate for employees who live in London, where living costs are higher than in other parts of the country.

That link to everyday costs is what makes the real Living Wage so important. In March 2026, for example, 67% of adults reported a rise in their cost of living the previous month, according to the Office of National Statistics (ONS). A staggering 91% said they felt the rise most in their food shop – a basic necessity, not a luxury that households can simply do without.

The Living Wage Foundation announces the real Living Wage in October each year, giving employers until 1 May the following year (6 months) to implement the new wage rate.

The UK Living Wage 2025-2026 is £13.45, and the London Living Wage is £14.80. Any business can choose to pay these rates, but only businesses accredited by the Living Wage Foundation can call themselves a Living Wage Employer. We’ll discuss accreditation in more detail later on.

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

The real Living Wage is different from the National Living Wage and National Minimum Wage, which are rates set by the UK Government. Although they can be easy to confuse, knowing the difference will make a huge difference to your employees and your business. Here’s a breakdown of the key differences:

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Why become an accredited Living Wage Employer?

Becoming an accredited Living Wage Employer signals to employees, candidates, and customers that your commitment to fair pay is genuine by making it visible, verifiable and independently recognised. Accreditation costs as little as £100 per year for businesses with fewer than 10 employees and gives you access to:

1. The Living Wage Employer Mark – a recognised badge of responsible employment displayed on your premises, website and marketing materials
2. A listing on the Living Wage Foundation’s public employer directory, which is searchable by candidates, clients and procurement teams
3. Access to the Foundation’s employer network, events, and peer community
4. Resources and guidance to help communicate your commitment internally and externally
5. Recognition that counts towards Environmental, Social and Governance (ESG) frameworks and social value in procurement

For many businesses, becoming an accredited Living Wage Employer is tied into their core values and who they are as an employer. If you’re about to make your first hire and deciding who you want to become, accreditation could be the first clear expression of the kind of workplace you intend to build.

We’ve been an accredited Living Wage Employer since 2019 – a decision that Quality Company Formations Chief of Staff, John Carpenter, describes as making perfect sense:

Accreditation was a no-brainer for us because it reflected two values we already held closely: culture over revenue and doing the right thing. Paying the real Living Wage is a simple way to show our people that their wellbeing matters, and that the standards we talk about are the standards we’re prepared to act on.

There are also wider strategic reasons for becoming a Living Wage Employer. Let’s take a look.

Support recruitment efforts

When candidates are comparing several similar roles, a Living Wage Employer Mark on your website could give your business a competitive advantage. In fact, research published by the Living Wage Foundation found that 75% of low-paid workers would switch to an employer who pays the real Living Wage. That can be particularly useful if you’re a smaller business and you’re working to strengthen your employer brand.

Improve employee retention

Paying your team a wage they can actually live on is a good incentive for them to stay with your business. And when people stay longer, you spend less time covering gaps, training replacements and rebuilding working relationships.

Norwich Theatre, for example, reported that voluntary turnover more than halved after they introduced the real Living Wage. This improved retention reduced their recruitment costs by £7,000 in 2023/24 and a further £15,000 in 2024/25.

Of course, you’ll need to budget for the higher wage bill after accreditation, but this could at least be partially offset by the time and money you’ll save on recruitment and training.

Protect employee productivity

An analysis by the Chartered Institute of Personnel and Development (CIPD) found that poor financial health leads to lost concentration, reduced output and higher rates of absence – all of which cost businesses directly. Becoming an accredited Living Wage Employer goes a long way to protecting the financial health of your team and, in doing so, their ability to be productive.

Signal a commitment to ESG

If you’re seeking investment or working in supply chains that have social responsibility requirements, accreditation could be useful as documented evidence of your commitment to fair pay. This is also increasingly relevant under ESG reporting frameworks. It gives you something specific and independently verified to include in due diligence, supplier questionnaires and social value reporting.

Support Employment Rights Act 2025 preparation

The Employment Rights Act 2025 doesn’t require employers to pay the real Living Wage. However, it does increase the need for clear pay and workforce records, including new duties around holiday pay records and wider changes to sick pay and workers’ rights. If you’ve already been through Living Wage accreditation, you’ll have done some of that groundwork by checking who’s covered, what they’re paid and where regular contractor arrangements need attention.

How to become a Living Wage Employer: step by step

We know first-hand that beginning the Living Wage Employer accreditation process can feel like a big step. The good news is that some businesses get accredited in as little as 10 working days. To make it easy for you, we’ve broken down the process step by step.

1. Compare your direct employee wages to the real Living Wage

The 2025-2026 real Living Wage is £14.80 per hour in London and £13.35 per hour everywhere else in the UK. You must start paying all your direct employees aged 18 or older at least the relevant rate before you can become accredited.

So, the very first step is to check the hourly rates you currently pay each of your direct employees and whether they live in London or elsewhere in the UK. This includes:

• Permanent and temporary employees
• Full-time and part-time employees
• Apprentices
• Salaried employees whose pay needs to be converted into an hourly rate

2. Check your regular contractors and create a plan

As a Living Wage Employer, you’ll also need to pay your regular contract workers the real Living Wage. So, the next step is to identify who your regular contractors are and how their pay compares to the relevant 2025-2026 rate.

A contractor is generally covered if they work for you for at least two hours a week over eight consecutive weeks. Suppliers who only provide goods, such as stationery or equipment, aren’t included. Some examples of regular contractors include:

• Cleaners
• Security staff
• Caterers
• Reception staff
• Long-term agency workers

Unlike direct employees, you don’t need to have the real Living Wage in place for regular contractors before you apply for accreditation. Instead, you can agree on an implementation plan with the Living Wage Foundation. In practice, this usually means promoting the rate to your existing contractors and setting a clear timeline for bringing contracts in line, often over a period of up to three years.

Your plan should set target dates for when each contractor will move to the correct rate, for example, the next renewal date or the earliest point at which the contract can be changed. If a contractor won’t agree to the real Living Wage by the agreed deadline, you may need to move to a supplier who will. You’ll also need to add the real Living Wage as a requirement in future tenders and contract terms.

It’s also worth checking how this affects temporary or agency workers. Because you pay the agency rather than the worker directly, you’ll need to tell the agency the hourly rate the worker must receive after its fees or margin. This may increase the agency rate you pay, so build it into your budget before you apply.

3. Budget for the long-term commitment of accreditation

At this point, with your employee and contractor audit complete, take some time to calculate the cost of becoming a Living Wage Employer in both the short and long term. Your calculations should account for:

• Immediate pay increases to bring employees in line with the Real Living Wage
• Related employment costs, including National Insurance and pension contributions
• Any new hires you intend to make within the next 12 months
• Immediate and future increases to contractor rates
• Increase in recruitment rates for temporary employees
• Future annual increases to the real Living Wage
• The annual accreditation fee – this is based on the size of your business, starting at £100 for those with fewer than 10 employees.

4. Submit an accreditation enquiry

The first formal step toward accreditation is to complete the Living Wage Foundation’s online enquiry form. This asks for basic information about you and your business, including the industry you operate in and the number of people you employ. You won’t sign up or pay the fee at this stage – your enquiry simply starts the accreditation process.

The Living Wage Foundation will then email you:

• A link to the online licence form
• Guidance on implementing the real Living Wage
• The accreditation fee you’ll pay based on the size of your business
• Support with any contractor milestones you need to agree on

Use the guidance to check your work from the first three steps before completing the licence form. If anything is unclear, this is the point to raise it with the Foundation. Their website also has a detailed FAQs section designed to help you through the process.

5. Complete the online licence form

Once you receive the email, follow the link to complete the online licence form. This is your official application to become a Living Wage Employer. You’ll need to confirm that you pay all your direct employees the relevant 2025-2026 rate and provide your contractor implementation plan.

Once complete, an authorised person, usually a director, owner, or senior manager with authority to act for the business, must sign the licence online. By signing, you’re making an ongoing commitment to maintain the real Living Wage and implement future annual rate increases. It’s also at this point that you’ll pay the annual accreditation fee quoted by the Foundation.

Once your signed licence has been received, the Foundation will check that you understand and meet the requirements for accreditation. They aim to process straightforward applications within 10 working days, although more complex applications for larger businesses can take up to six months.

When your accreditation is approved, you’ll receive a confirmation email, the Living Wage Employer Mark and marketing materials to help you share the news. You’ll also be added to the online directory of Living Wage Employers.

6. Maintain your accreditation

Becoming a Living Wage Employer is an ongoing commitment, and you’ll need to do the following to maintain your accreditation:

• Apply each new annual real Living Wage rate announced in October by 1 May the following year
• Tell your employees about the new rate within one month
• Meet the contractor milestones agreed in your implementation plan
• Keep your business details up to date with the Living Wage Foundation
• Pay your annual accreditation fee to keep your licence active

What is a Living Hours Employer, and should you apply?

A Living Hours Employer is an accredited Living Wage Employer who also guarantees more secure and predictable working hours. It’s a way to give your team more certainty about their income and schedule, so they can plan their budget and feel financially secure.

The accreditation applies to staff earning between 1 and 1.25 times the real Living Wage. For 2025-2026, that means workers earning between £13.45 and £16.81 per hour across the UK, or between £14.80 and £18.50 per hour in London.

To qualify, you’ll need to give workers:

1. A guaranteed minimum of 16 hours a week, unless they ask for fewer
2. At least four weeks’ notice of shifts, with full pay if a shift is cancelled during that period
3. A contract that reflects the hours they regularly work

The same standards also apply to regular contracted workers who provide a service to your business for at least two hours a week over eight consecutive weeks. If existing contracts make this difficult straight away, you’ll have up to three years from accreditation to implement Living Hours for contracted staff.

For businesses, more predictable hours can make rotas easier to manage and reduce last-minute gaps. They can also help you attract candidates, keep experienced people and create an environment where staff have the headspace to do their best work.

The Employment Rights Act 2025 will introduce new rights around guaranteed hours, shift notice and payment when shifts are changed or cancelled at short notice. Living Hours already covers these areas, so accreditation can help you review your contracts, rotas and cancellation processes before the new rules come in.

Build the kind of business you want to run

Becoming a Living Wage Employer gives you a clear framework for fair pay, stronger employment practices, and a workplace where people feel valued.

The choices you make early on shape the kind of employer and business you become. Register your company today and build a business you’re proud of, from day one.