Living Wage FAQ

A Living Wage is the remuneration that employee should receive to afford a decent standard of living for both themselves and their families. Elements of a decent standard of living include food, water, housing, education, health care, transport, clothing and provision for unexpected events (Anker and Anker, 2017) . The Living Wage rate will be reviewed annually, reflecting changes to the Consumer Price Index (A) and the new rate will be announced in the first quarter every year.

Companies are encouraged to provide a Living Wage that covers their staff's lunchtime as well. However, under the Living Wage Charter, it is not a compulsory item. 

Yes, it is. The general direction of the Living Wage Charter is to ensure that employees get paid enough to lead a decent life. If the weekly/monthly wage of the employee divided by the total number of hours worked is equal to or greater than the Living Wage standard, it is acceptable.

Voluntary Living Wages have been implemented by employers in the United Kingdom, New Zealand, and elsewhere across private, public, and non-profit sectors.
 

Private Sector
Over 12,000 employers in the U.K.’s private sectors have voluntarily signed on are paying a Living Wage, these include organisations that range from banks (or financial institutes) to retailers.
Linklaters, a global corporate law firm headquartered in London, has witnessed the following changes after introducing Living Wages for its U.K. staff members¹ : 

• Enhanced quality of work among client-facing support staff
• Increased commitment of staff members
• More flexible and experienced teams

Public Sector
Government authorities, schools and healthcare bodies are among some of the U.K.’s public bodies that adopted a Living Wage.
New Zealand’s Wellington City Council notes that the implementation of Living Wages by the public sector can² :

• demonstrate the organisation’s values
• promote the Living Wages and encourage others to adopt it

Non-profit Sector
Several non-government organisations and charities have committed to implementing Living Wages, including Oxfam Hong Kong, Oxfam New Zealand, and Amnesty International U.K.

¹ Living Wage Foundation, “Case Study: Linklaters,” February 2018, https://www.livingwage.org.uk/sites/default/files/TheLivingWage_CaseStudies_Linklaters_Apr18.pdf.

² Wellington City Council, “New Procurement Strategy Brings Benefits to City,” News and Information, Wellington City Council, February 26, 2021, https://wellington.govt.nz/news-and-events/news-and-information/our-wellington/2021/02/procurement-strategy.

You are expected to make the following commitments:

• To incorporate Living Wages into your organisation’s strategies; 
• To designate a responsible person to oversee the implementation of the Living Wages; 
• To remunerate all your directly employed staff not less than the Living Wage rate; 
• To review wage rates of outsourced staff before the expiration of existing contracts, to ensure that wage payments for all outsourced staff who work at least 18 hours a week on your premises are paid not less than the Living Wage rate; 
• To announce your commitment to the Charter to staff members and your networks; 
• To display the Living Wage employer logo on your website and materials to share your commitment; 
• To promote the Living Wage Initiative.

You are expected to pay all of your directly employed staff a Living Wage within six months after signing the Living Wage Charter. You are also expected to pay outsourced staff who work at least 18 hours a week on your premises at the Living Wage rate in phases within 2 years.

You are expected to adjust your wage rate accordingly within six months after Oxfam’s announcement of annual changes to the Living Wage rate. The new rate will be calculated after the government announces the annual CPI.

• No. It is entirely voluntary to commit to the Charter. However, if your organisation breaches the Charter and does not comply with its guidelines after several reminder for, your organisation might be removed from the Living Wage employer list and prohibited from using the Living Wage logo in any materials (including websites and publication) or present itself as being associated with the Charter.
• You are encouraged to honour the Charter as a commitment to both your staff and your networks.

• Yes. It is entirely voluntary to commit to the Charter. You must submit a written notice to Oxfam if you decide to withdraw your commitment. 
• You should remove the Living Wage employer logo from your website and materials after your withdrawal.
• Nonetheless, you are encouraged to honour the Charter as a commitment to both your staff and your networks.

• Notwithstanding any provisions on standard working hours in contracts of employment or contracts for service, Living Wage payments should always be calculated in terms of actual working hours.
• Overtime compensations are also payable based on Living Wage rates, provided that the contract of employment concerned stipulates overtime payments. 

• Employers’ contributions to the Mandatory Provident Fund Schemes (MPF) DO NOT form any part of Living Wage payments.
• Bonuses DO NOT form any part of Living Wage payments.
• Any non-monetary rewards, one-off rewards or gratuities DO NOT form any part of Living Wage payments.

• Any commission that is paid, with the prior agreement of your staff, and constitutes a large part of that staff’s salary, can be counted towards the Living Wage, under the condition that the employer guarantees that it will top up the staff memeber's salary to the Living Wage level if the total pay including commission falls below the Living Wage.
• For examples on calculating Living Wages with commissions, you may also refer to Appendix 2 on page 9-12 of the Living Wage Charter.

• Allowances (e.g., transportation allowances), which are offered on a regular basis could count towards the Living Wage at employers’ discretion.

• Yes, statutory entitlements under the Employment Ordinance (e.g. holiday pay, annual leave pay, sickness allowance, maternity leave pay, severance payment, long service payment, etc) are calculated according to the definition of wages and should count towards the Living Wage.

• The Charter stipulates that Living Wages apply to ALL your directly employed staff, including part-time staff and temporary contract staff.
• The Living Wages also apply to outsourced staff who regularly work on your premises for at least 18 hours a week by phases within two years. This includes, but is not limited to, contracted catering, cleaning, security, gardening and ground staff.
• The Living Wages does not apply to contractors who supply your organisation with products, or contractors engaged under one-off service contracts and who are paid a lump sum amount, regardless of the working hours. 
• The Living Wage applies to BOTH written and oral contracts of employment.

• Yes. The Charter stipulates that Living Wages should apply to ALL staff members, regardless of their abilities.

• No. Living Wages DO NOT apply to a staff who have no direct contract of employment or contract for service with your organisation. 
• For example, Living Wage rates DO NOT apply to cleaners employed by a property management company that provides office cleaning services to all tenants of a building, including your premises.

• No. Living Wages DO NOT apply to self-employed workers who carry out business on their own account. 
• As an illustration, freelance workers who are remunerated at a piece rate and/or not entitled to employment-like benefits (e.g., annual leave) are likely treated as self-employed workers for the purpose of Living Wage payments.

• Living Wages DO NOT apply to student interns and work experience students during a period of exempt student employment under the Minimum Wage Ordinance (Cap. 608).
• Living Wages DO NOT apply to apprentices registered under the Apprenticeship Ordinance (Cap. 47).

Please contact us at livingwage@oxfam.org.hk or 3120 5292 if you have any questions.