Do Contractors Deserve a Living Wage?

Paulien: Dani, what is a contractor?
Dani: A contractor is essentially a company. That company can be very small (sometimes it’s just one self-employed person) or it can be a larger entity that hires many workers. What they have in common is that they deliver services or goods under a contract for another company. So the term “contractor” includes everything from a freelance graphic designer to a construction firm supplying dozens of workers.

Paulien: And where do contractors work?
Dani Practically anywhere: some contractors have their own office or workshop, others come to your office or factory and work side by side with your employees. Some operate fully online, especially in digital or platform jobs. So, the reality is that contractors can work everywhere (on-site, off-site, or remotely), which makes them a very flexible part of the labour market.

Paulien: Dani, are contractors always self-employed, or is it more complex than that?
Dani: It’s definitely more complex. A contractor can be a self-employed person working alone — that’s the image many people have. But a contractor can also be a company with many employees on its payroll. Some of these companies already pay a Living Wage, others don’t. So when we talk about contractors, we need to keep in mind that it can mean many things.

Paulien: Do contractors need a Living Wage?
Dani: Yes, though it depends on the type of contractor. If the contractor is a self-employed person, then what’s needed is a Living Tariff. That means earning enough per hour to cover not just the cost of living in that country or region, but also the costs of doing the job. Think of things like a laptop for an online worker or a car for a driver. Plus, of course, social security and taxes.
If the contractor is a company, then the responsibility shifts: that company should try to make sure all of its employees are paid at least a Living Wage, whether they work one hour or forty, and no matter if they work from home, in an office, or on the premises of a client.

Paulien: If contractors deserve a Living Wage, do they get the Living Wage related to the location of their company, or the company they work for? It might be possible that they get a different regional Living Wage each time. How should that be dealt with?
Dani: In principle, the Living Wage of the region where the contractor’s company is based applies: if it is one person, then the Living Tariff of where that person is operating applies; if it is a company, then the company will apply to its employees the Living Wage of its location. That’s straightforward if everyone is in the same area, but it gets complicated when work stretches across different regions or countries, where wage levels can differ a lot. The best way to handle this is to avoid competition on Living Wage levels. Ideally, the same standard should apply across the board: for the self-employed, for the employees of the contractor, and for the company where the work is carried out. That way, you keep things fair and transparent.

Paulien: What if the contractor is based in Egypt and the work needs to be done in the south of France? Which Living Wage applies?
Dani: If we assume the contractor is a freelancer (one person) and the work has to be done in France, then the contractor is not located in Egypt but in France (thus the French Living Tariff would apply). If the contractor is a company from Egypt with employees who are working in France, we get back to the discussion about remote workers who are on the payroll. If they temporarily work in France, then they are paid the Egypt Living Wage (their normal wage). If they are based in France with an Egyptian contract, they would also get the Egypt Living Wage, but they would probably bargain for a higher salary. If in this bargaining the company wants to be fair and pay the Living Wage of where the employee is actually staying, but doesn’t want to check their location or the location is not clear, the best is to pick the Living Wage of the capital region and not the country-level Living Wage. This is because — especially in larger countries — this estimate is too general and not good enough. As a rule of courtesy, the company could also pick the region that has the highest (at least Typical Family Lowerbound estimate), as this would avoid competition on wages.

Paulien: What if a contractor’s location isn’t clear, for example when someone travels between countries? Which Living Wage or Tariff should apply?
Dani: It depends on the situation. For a self-employed person, the Living Tariff can either vary with the location where they work or be based on the most expensive location they will operate in: that’s the fairest approach. For employees, if the travel is for work, then naturally the employer has to cover the extra costs. But if someone chooses to move between countries for personal reasons, that’s different. In those cases, it becomes a matter of bargaining: the company can decide whether to apply the highest Living Wage or stick to the wage level of its own location. In terms of compliance, I believe the company’s location remains the reference point.

Paulien: How can contractors prove that they pay a Living Wage? Do you just believe them, or do they need to show evidence, like a payslip or an audit?
Dani: Proof is essential. The simplest — and cheapest — way is through payslips, which show what employees actually receive. In some cases, an audit may be needed to verify the full picture. That’s why it’s smart for companies to be transparent and state clearly in their annual reports that they pay a Living Wage. If they don’t, they may face requests for audits. And of course the tricky question then is: who pays for that audit? To be honest, I don’t know. Another issue: how do we know the self-employed got the Living Tariff?

Paulien: How should companies deal with a contractor who only works one hour for them? Can they still argue that a Living Wage has been paid?
Dani: That’s a tricky one, so let’s tackle it separately again. If the contractor is another company, the company itself has to make sure all their staff are paid a Living Wage, no matter if they work one hour or forty. So the Living Wage principle applies, even for short contracts. If the contractor is a self-employed person who is paid at least the Living Tariff for that hour, you could say the Living Wage principle is respected. But, in practice, one hour of work a week is not enough to live on. A Living Tariff per hour is a good benchmark, but people also need enough hours to make a living. Maybe we should talk about setting a minimum engagement: for example, no job less than 20 hours per week. And even then, workers would still need more than one job to reach a full working week and a meaningful income. This is a topic we definitely need to keep discussing, maybe in another webinar!

August 2025