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A living wage

Krav

If you believe that there is an increased risk that your suppliers do not respect employees' right to a living wage, and you wish to include this topic in the annex to your Code of Conduct, you can add the following requirements to your Code of Conduct by clicking on "Save to clipboard".

Many Codes of Conduct require the supplier to comply with local regulations for minimum rates of pay. However, local minimum rates of pay are sometimes completely inadequate - among other things because in many countries these rates are eroded by inflation. In other countries, there is no legislation at all concerning minimum rates of pay. It is therefore important to focus on employees' right to a living wage. 

Right to a living wage

In respecting this right, the supplier should see the following as essential steps:

a. Paying employees wages in accordance with the local and national applicable wage statutes, whether or not they are enforced;

b. Seeking to understand the minimum wage requirement for basic needs to be met in the area of operation and seeking to ensure workers are provided with remuneration at or above such amount;

c. Paying full-time employees regularly and at intervals not exceeding one month;

d. Providing employees with a wage statement including information on the pay period concerned, the gross amount of wages earned, any deduction which may have been made and the reasons therefore, and the net amount of wages due;

e. Not making deductions from wages as a disciplinary measure if those wages have already been earned;

f. For non-salaried employees, keep accurate written records on each employee’s hours of work, overtime work and wages paid;

g. Not charging workers exploitative prices for company-provided, necessary goods and services when they have limited access to other providers.

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Below there is more information about various aspects of a living wage:

Pay
As a minimum, the supplier should pay a wage that ensures a decent standard of living for all employees and their families (i.e. a living wage). This applies not only to food, housing and water, but also to education and disposable income.

In some sectors, employees are paid, in full or in part, according to how much they produce (piecework pay). Piecework pay systems must be assessed in detail, in order to ensure that the total pay covers the employee's needs, that the price per unit is not too low, and that production projections are not so high that the employees have to work for nothing in order to achieve the required output. 

Payment should be made in cash and directly to the employees, unless local legislation, current collective agreements or the employees themselves wish this to be otherwise. 

The supplier should not make deductions from the employees' pay as a penalty or as part of disciplinary measures. The supplier may, however, make deductions from the employees' pay for services received, such as lunch or contributions to social security schemes. However, such measures must be transparent for the employees and in accordance with local legislation. 

Other relevant information

Pay conventions and standards
If you make requirements of your suppliers in this area, you can refer to the Conventions listed below: 

In accordance with ILO Convention no. 131 on minimum wage fixing, the supplier must pay a wage that ensures employees a decent standard of living. 

In accordance with ILO Convention no. 95 on the protection of wages, the supplier must inform its employees of key wage issues both before and during the term of employment. This Convention also stipulates that wages should be paid at regular intervals. 

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