Real Living Wage
The voluntary wage rate set by the Living Wage Foundation; higher than the statutory National Living Wage and increasingly required by UK public sector.
Definition
The Real Living Wage is the voluntary wage rate set by the Living Wage Foundation based on the cost of living. There are two rates: a UK-wide Real Living Wage and a higher London Living Wage reflecting London cost of living. Both rates are higher than the statutory National Living Wage. Many UK public sector contracts now require suppliers to pay the Real Living Wage to staff delivering the contract, particularly in social care, FM, and security categories where workforce conditions are a major value-for-money consideration.
How it works in practice
The Living Wage Foundation accredits employers who commit to paying the Real Living Wage to all directly-employed staff and to require contractors and subcontractors working on Living Wage employer premises to do the same. The rate is reviewed annually in November based on the cost of a basket of goods and services. UK Real Living Wage and London Living Wage are typically £1-£3 above the statutory National Living Wage. Public sector requirement varies: Scotland Fair Work First framework requires Real Living Wage for above-threshold Scottish public sector contracts; many London local authorities and NHS trusts require London Living Wage for contracts in London; some central government and local authority buyers require Real Living Wage as a social value commitment under PPN 002. Compliance is evidenced through Living Wage Foundation accreditation or contract-specific certification. For suppliers the practical implication is workforce cost: bidding into in-scope public sector means costing labour at Real Living Wage (and London Living Wage in London) regardless of national statutory rates. Bidders should factor this into pricing from the outset; retrofitting Living Wage commitments mid-contract is operationally and commercially difficult.
Common questions
Is the Real Living Wage statutorily required?
No. The Real Living Wage is voluntary; the statutory minimum is the National Living Wage (and National Minimum Wage for under-23s). The Real Living Wage is contractually required by many public sector buyers as a procurement condition; suppliers paying the Real Living Wage in respect of in-scope contracts are meeting a contract obligation rather than a statutory one.
How does Real Living Wage differ from London Living Wage?
London Living Wage is higher than UK Real Living Wage to reflect London cost of living. Suppliers delivering contracts in London to Living Wage commitments must pay London Living Wage; suppliers delivering elsewhere pay UK Real Living Wage. Both rates are reviewed annually in November by the Living Wage Foundation.
Do I need Living Wage Foundation accreditation?
Not always. Many public sector contracts accept evidence of Real Living Wage payment without requiring Living Wage Foundation accreditation; suppliers self-certify through contract reporting. Some buyers prefer accreditation as third-party assurance. Check the specific contract requirement; accreditation is a positive signal even where not strictly required.