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benchmarking HR policy and practice
London allowances
IDS HR Study 904 • October 2009
Page 2 Overview
London waiting; London allowances at a glance
4 Sectoral round-up
A detailed look at the location allowances in three key areas of the London economy
– financial services, the public sector and retail – and a summary of developments in
other sectors
12 Company practice
A sector-by-sector guide to London, South East and other location allowances in
132 organisations
London waiting
Employers are now using a wide range of approaches to recruit and retain employees in London and
other high-cost areas of the country, making it increasingly difficult to pinpoint a definitive London
‘premium’. There has been little significant upwards movement in the level of location allowances
this year, with the current economic climate meaning employers’ priorities are likely to lie elsewhere.
● The median free-standing inner London upwards from a national or provincial zone to
allowance for the featured banks is £3,550. include outer London and culminating in either
the West End or central London.
● The median free-standing inner London
allowance for the featured building societies is ● Stores are allocated to zones on the basis of a
● The median free-standing inner London profit sector often follow the advisory amounts
allowance across the public sector is £3,379. published each year by the local authorities NJC.
Sectoral round-up
There are clear sectoral patterns in the form and level of London and other location allowances. We
highlight the latest developments and discuss the different methods used to differentiate pay on
the basis of location. In keeping with the composition of the capital’s labour market, we focus on
the allowances paid in the finance, public and retail sectors.
These are one-off lump-sum, non-pensionable London is £4,898. At the top of the upper scale,
payments ranging from £500 to £3,000 (or up to this rises to a maximum of £7,763. The
£5,000 in exceptional circumstances). They are increased differential can be broadly explained
intended to reward officers in posts that carry by a higher 2009 pay award for teachers in
significantly higher responsibility than the norm London. In inner London, those on the lowest
for their rank, present particular recruitment or pay point received a 4 per cent rise, while those
retention difficulties or have especially on the upper scale received 3 per cent. Salary
demanding working conditions or environments. spine points on the national pay scale were
increased by 2.3 per cent.
National Health Service
The differential over the national rate for
Under Agenda for Change, NHS staff receive teachers in outer London ranges from £3,450 at
‘high-cost area supplements’. These apply to all the bottom of the scale to £3,594 at the top.
employees except those covered by the Doctors’ Teachers in the fringe area in the lowest grade
and Dentists’ Pay Review Body and very senior receive a differential of £1,015, while those in
managers. The supplements are expressed as a the highest receive £1,016.
proportion of basic pay (including the value of
any long-term recruitment and retention premia) Excellent teacher scheme (ETS)
subject to minimum and maximum amounts. Teachers who have been at the top of the upper
pay spine for a minimum of two years are eligible
The formulae used to calculate the supplements
to apply for ‘Excellent Teacher’ status. ETS
remain unchanged. However, an increase to
teachers are paid a spot salary within a range,
basic salaries of 2.4 per cent from April 2009
with the maximum and minimum amounts
means that the amount employees receive has
adjusted as part of the annual pay review.
increased. In inner London (where staff receive a
supplement of 20 per cent of salary) employees The 2009 review saw a change to the way this
receive £3,947 to £6,080 depending on basic range is calculated. The minimum is now the
pay. The payment range is £3,339 to £4,256 in highest possible rate for classroom teachers plus
outer London (based on 15 per cent of salary), 8 per cent. The maximum is calculated by
and £912 to £1,581 in the fringe (5 per cent). adding the minimum rate to the value of the
maximum of the independent teaching and
Recruitment and retention premia learning responsibilities allowance (ordinarily
NHS employers also have scope to pay payable to teachers who fulfil specific duties
recruitment and retention premia. However, to within a school). The result of these changes is
qualify, local employers must show that ‘market that, from September 2009, ETS teachers in
pressures would otherwise prevent the employer inner London could earn up to £8,384 (the
from being able to recruit and retain staff in differential over the national pay rate at the
sufficient numbers for the post concerned at the maximum) more than their counterparts in the
normal salary level for a job at that weight’. In rest of the country. The differential for outer
addition, they must have exhausted all non-pay London is £3,881 at the maximum and £1,097
benefits and other avenues for improving at the maximum in the fringe.
recruitment and retention, and they must consult
with neighbouring trusts. Sixth-form colleges
These premia can be applied nationally where Teachers in sixth-form colleges received an
there are particular recruitment and retention increase of around 2.45 per cent to their London
problems across the country. The combined allowances from September 2008, taking the
value of any nationally or locally determined level of inner London allowance to £3,508,
premia would not normally exceed 30 per cent outer London to £2,338 and fringe to £926.
of basic pay. Negotiations for 2009 were ongoing at the time
of going to press.
Teachers
Further and higher education
There are four geographically determined pay
spines for qualified teachers in England and Further education
Wales – national, inner London, outer London The Association of Colleges (AoC) has not set
and the fringe area. From September 2009, the any new London allowance rates since 2002. At
differential in pay for a qualified classroom this time, they stood at £2,385 in inner London,
teacher at the bottom of the main scale in inner £1,566 in outer London and £616 in the fringe.
Average earnings in London and the South East compared with the UK as a whole
Average male earnings in London are around 37 per cent differential is almost 13 per cent for men (and 24 per cent for
higher than those in the UK as a whole according to the 2008 women) in health and social work and 17 per cent for men
Annual Survey of Hours and Earnings, published by the (and 14 per cent for women) in education.
Office for National Statistics (the corresponding figure for
Accounting for London variations
women is around 29 per cent). In the South East, earnings
are 6 per cent higher for men (around 1 per cent for women) While these figures give an interesting insight, they should
than those throughout the UK. be treated with caution when it comes to determining a
London ‘premium’. Several factors account for the large
The table below provides a comparison of average gross differences in earnings between London and elsewhere.
weekly earnings between London, the South East and the While these include the effect of London allowances and
UK as a whole for full-time male and female workers. Details pay differentials as reported in this Study, more
are given by broad occupational group and for selected non- importantly the profile of jobs in London compared with
manual industries. the UK as a whole is not a comparison of like with like. In
The differential between London and the UK as a whole is the capital, there is a far greater predominance of white-
significantly higher for financial services than the other collar workers than elsewhere. Moreover, there is a higher
service sectors. Male earnings in London are almost 40 per concentration of highly-paid senior and professional jobs –
cent higher than for the UK as a whole in financial services this factor alone has a considerable impact on average
(around 48 per cent for women). By comparison, the earnings.
Comparison of full-time average gross earnings between London, the South East and the UK
London South East United Kingdom
Male Female Male Female Male Female
Occupations £pw £pw £pw £pw £pw £pw
Managers & senior officials 1,263.20 864.60 962.80 704.20 937.90 670.70
Professional 980.90 811.90 831.40 660.00 818.40 694.90
Associated professional & technical 811.70 635.40 628.10 526.90 641.80 535.00
Administrative & secretarial 524.70 478.30 468.50 386.80 440.30 382.10
Skilled trades 566.20 398.90 504.50 382.50 491.00 340.70
Personal service 494.70 386.00 392.30 316.10 389.20 324.60
Sales and customer service 373.10 344.00 341.30 308.30 339.80 296.80
Plant & machine operatives 549.50 438.60 475.90 339.90 460.00 327.80
Elementary 403.20 319.60 389.30 290.60 367.10 288.30
Selected industries (non-manual)
Wholesale & retail 634.30 485.50 607.90 437.60 531.80 392.10
Financial 1,363.60 866.60 810.50 562.20 977.00 585.90
Public administration & defence 788.50 623.50 635.60 495.00 644.20 493.90
Education 733.70 604.10 656.80 512.20 629.10 528.80
Health & social work 788.40 600.20 701.10 461.00 699.60 482.80
All service industries 872.70 625.40 668.20 489.30 644.50 489.00
All employees 862.40 624.60 669.20 489.40 631.10 485.50
Source: 2008 Annual Survey of Hours and Earnings, Office for National Statistics.
employees in London receive a salary £3,500 London and culminating in either the West End
higher than those on the national scale. or central London.
Employees at Acas working in inner London
Allocating locations to zones
receive £4,000 more than those on the national
pay scale. Stores or branches in London tend to receive the
highest allowances, followed by the rest of the
At other departments and agencies, the South East, but the allocation of stores to
differential can vary by grade. For example, at specific zones is rarely based on location alone.
the Department for Work and Pensions, the For example, a number of factors, including
inner London differential ranges from £3,490 to prosperity within the area and local crime rate,
£5,280, and at the Identity & Passport Service are considered at Somerfield. To avoid any
from £3,910 to £6,008. Overall, the highest doubt, most retailers compile a list of all
possible differential is £6,717 at the Valuation locations, specifying which zone each and every
Office Agency. store is in.
Differential in basic pay plus allowance Out-of-town retail parks and airports sometimes
At some civil service organisations, separate attract a higher salary or allowance due to the
London pay scales operate alongside a system of competition for staff and the high travel costs
free-standing allowances. For example, staff at associated with these locations. Pret A Manger,
the Home Office working in the capital receive a for example, continues to operate higher pay
differential of between £535 and £3,590 scales for staff working at its airport outlets at
depending on grade, as well as a separate Heathrow, Luton and Stansted.
location allowance of £3,020 in Inner London.
It is also relatively common for stores in major
Some organisations operate separate pay scales towns or cities outside the South East to attract
that cover all staff, while free-standing location a premium rate of pay. Marks and Spencer, for
allowances are targeted at specific groups of staff. example, has different rates for hot-spots in the
At the Valuation Office Agency, for example, band South and in North and Central England.
3 staff in central London receive an allowance of Peacocks Stores has a separate ‘exceptions’ zone,
£500 in addition to the relevant differential. which is applied in specific difficult to recruit
areas.
Free-standing allowances
A number of the featured civil service Pay differentials
organisations continue to use free-standing In the company practice section of this Study, we
allowances to differentiate between pay levels in express the differential between the national/
London and elsewhere. The highest of these is provincial band and the higher pay bands as an
the £4,730 paid to non-resident staff at the hourly rate. These differentials are, therefore,
Corporation of London working in the centre of rarely a fixed amount and vary each year
the capital. depending on the annual uplift to pay rates. If
the same percentage increase is applied to all
Retail salaries, the differential will increase in that year.
However, if higher percentage increases are
This HR Study includes details of the location- applied to the bottom of the national or
based payments made by a wide variety of retail provincial zone, the differentials may actually
companies, from fast food outlets to chain stores reduce.
and specialist retailers. These organisations take
a variety of approaches to address recruitment Impact of the national minimum wage
and retention difficulties presented by locations Increases in the national minimum wage over the
in high cost-of-living areas. last few years have led to many differentials in
the retail sector shrinking, as the lowest rates of
Zonal pay systems pay increase faster than those at the top end.
The majority of the featured retailers operate This accounts for a few cases where the
multiple pay scales across a number of zones, differentials for some of the higher bands are
usually spreading out from central London. The smaller than last year. The two lowest pay rates
exact number of zones varies, but typically there at some retailers, such as C&J Clark
are four to six, progressing upwards from the International and Next Retail, have been merged
national and provincial scale to include outer as a result of this development. In instances
where they have been retained, the differences in National Grid’s allowance remained the same,
pay between them are often minimal. but the London weighting structure at the
organisation is currently under review with
Free-standing allowances changes anticipated in the next year.
Free-standing allowances are far less common in
the retail sector – where employees tend to be British Gas Services scrapped its traditional
paid hourly – than elsewhere. Among our London allowance system for industrials based
featured organisations, AJT Trading, on distance from Charing Cross in 2009. The
Waterstone’s and Blackwells operate free- organisation is based in geographic patches that
standing allowances for all staff in the relevant do not neatly fit with such a rigid structure. It
locations. However, this form of payment is now determines the level of allowance by
often limited to salaried managers or supervisors allocating specific locations to one of five
only – as at Halfords, McDonalds and Makro separate bands.
Self-Service Wholesalers.
IT, telecommunications & media
The distinction between differentials and In the IT, telecommunications and media sector,
allowances is sometimes blurred. For example, there was no movement in London supplements
some retailers, such as Comet, separate their in 2009. The BBC’s allowances for employees in
location payments into zones but still consider the Metropolitan Police District remained
them to be supplements on basic pay. unchanged at the time of going to press – staff
Allowances as a percentage of salary earning £25,000 or more receive an allowance of
In some cases, location allowances are expressed £3,537 and those earning less than £25,000,
as a percentage of salary. At Kwik-Fit, for £4,080 – with the latest pay offer proposing
example, autocentre staff receive an allowance rates stay the same. Meanwhile, BT’s central
equivalent to 7.5 per cent of basic salary in London allowance for non-management grades
London and 5 per cent of basic salary in the remained at £3,116.
Thames Valley and the South East. At Laura
Ashley, the differential for a fully-trained sales Transport, storage and distribution
adviser in inner London is 10 per cent on the In the transport, storage and distribution sector,
rates paid elsewhere. rates remained the same at First Great Western,
Parcelforce and Royal Mail. National Express
Labour market top-ups East Coast, South West Trains and Network Rail
A ‘top-up’ system is another method some all increased their rates in 2009.
retailers use to ensure their pay rates in particular
locations remain competitive in the local labour Not-for-profit
market. These can be operated either instead of, Many of the featured not-for-profit
or in addition to, other location-based organisations base their London allowances on
arrangements. Wilkinson (Home & Garden) has the advisory amounts published each year by the
two levels of labour market ‘top-up’ to boost pay local authorities NJC. The 2009 figures were
in tight labour market areas, such as inner and £3,299 for inner London, £1,755 for outer
outer London, and the Thames Corridor. London, £798 for the inner fringe and £555 for
the outer fringe. Organisations in the sector that
Other sectors do not follow these recommended amounts
usually still pay a free-standing London
Energy & water allowance – the highest at Help the Aged is
In the energy and water sector, Sellafield £5,135. Johnnie Johnson Housing is an
increased its location allowances as part of its exception, where employees working in
annual pay agreement in 2009 – employees in Hertfordshire receive 6.3 per cent of basic salary
London now receive a supplement of £4,725. as a location supplement.
Page Page
Banks 12 Construction 19
Building societies 13 Transport, storage & distribution 19
Insurance companies 14 IT, telecommunications & media 21
Retail 14 Other services 21
Energy & water 18 Not-for-profit 21
Oil, chemicals & pharmaceuticals 18 Public services 22
Other manufacturing 19
Unless stated otherwise, allowances are shown as annual salaries, and distances quoted are from Charing Cross. Where
there has been a recent change, the figures in brackets show the previous level of allowance. The fourth column (Pen)
indicates whether an allowance is pensionable. The next column (Enh) shows whether it is enhanceable (ie is considered
part of basic pay for the purpose of calculating overtime and/or shift premium payments).
Organisation & effective date Location Allowance Pen Enh Other information
Banks
Abbey Inner London Yes Yes *Outer London rate varies according to job
1.3.08 (0–5 miles) 3,500 role and market data – some roles receive a
higher allowance due to the business unit
Outer London they operate in
(5.1–37 miles) 1,500 to 2,000*
Alliance & Leicester Group Inner London (0–4 miles) 3,520 No No *After two years’ satisfactory service
1.7.92 4,200* **After five years’ satisfactory service
4,625** A ‘hot spot’ location payment of £1,000 is
payable on minimum salaries where certain
Intermediate London (4–7 miles) 2,575 qualifying criteria are met, including housing
3,205* costs, branch accessibility, local competition
3,570** for skills, other significant local factors, and
measurable recruitment and retention
Outer London (7–16 miles) 1,470
difficulties
2,050*
2,465**
Allied Irish Bank City office (Angel Court), Gray’s Inn No No *From 1.6.07 permanent bank officials (up to
1.1.05 (Archway), Hampstead (Kilburn), and including assistant manager level) in
Mayfair, Tenterden St, Undershaft 3,550* Gray’s Inn, Old Jewry, Tenterden St, Angel
Court and Mayfair receive a further ‘central
Hammersmith, Totteridge & Whetstone London premium’ of £3,000
(North Finchley), Wanstead, Wembley,
Wimbledon 2,700
Bristol 500
Organisation & effective date Location Allowance Pen Enh Other information
Co-operative Financial Croydon, Ealing, Kingston-upon- Yes No
Services (cont’d) Thames, Lewisham, Walthamstow,
Wood Green 3,000
HBOS Inner London (0–3 miles) 3,450 No No In addition, HBOS has a separate salary guide,
1.10.02 Outer London (3 miles to M25) 2,250 which is also influenced by location.
M25 to 40 miles 1,200 Generally, this means staff working nearer
central London receive higher basic salaries,
which are pensionable
Location examples:
Zone 1: Cannon Street, Charing Cross, Islington, Oxford Street
Zone 2: Bromley, Putney, Mitcham
Zone 3: Dorking, Epsom, Sutton, Watford
National Australia Group Less than 6 miles 3,595 No No *Abingdon, Banbury, Basingstoke, Bath,
1.4.05 6–16 miles (Enfield and Watford) 2,311 Bedford, Bournemouth, Brighton, Bristol, Bury
16–22 miles (St Albans) 1,438 St Edmunds, Cambridge, Cardiff, Chelmsford,
South East* 770 Crawley, Essex-Laindon, Exeter, Guildford,
Hemel Hempstead, Hertford, High Wycombe,
Hitchin, Luton, Maidstone, Milton Keynes,
Oxford, Portsmouth, Plymouth, Reading,
Slough, Southampton, Stevenage, Taunton
Standard Chartered Bank London allowance 3,896* No No *With the majority of employees based in the
capital, London weighting no longer applies
to new recruits. Stated allowance only applies
to staff on older contracts
Building societies
Chelsea Building Society Inner London 3,500 No No
1.4.08 Outer London 2,000
Location examples:
Inner London: Chelsea, City, Fulham, Hampstead, Kensington, Lewisham, Streatham, West End
Outer London: Bromley, Croydon, Ealing, Guildford, Harrow, Kingston, Reading, Sunbury, Sutton, Watford
Leeds Building Society London, Epsom, Reading 4,254 No No Allowances are based on labour market
1.8.08 demand rather than on miles from central
Barkingside, Stevenage, Watford 2,781 London
Banbury, Birmingham, Bristol, Cardiff,
Cheltenham, Gloucester, Manchester,
Southampton 1,823
Nationwide Zone 1 (0–5 miles) 4,550 No No *There are 132 ‘national plus’ locations
1.10.08 Zone 2 (5–10 miles) 3,150 nationwide – typically branches in big cities
Zone 3 (10 miles to M25) 2,000
Zone 4 (‘national plus’ branches)* 950
Organisation & effective date Location Allowance Pen Enh Other information
Skipton Building Society Central London 4,700 No No
1.4.01 South East (Cambridge, Croydon,
Guildford, Harrow, Kingston, Oxford,
Reading, St Albans) 4,200
Yorkshire Building Society 0–5 miles 4,389 Yes Yes
1.7.07 6–15 miles 2,655
16–25 miles 1,941
26–30 miles 1,062
Insurance companies
AEGON UK Central London (City of London, No No
(formerly Scottish Equitable) West End, Holborn) 3,500
1.1.01 Reading 2,000
Harrow 1,900
Croydon 1,850
Guildford 1,350
Maidstone 900
Chelmsford 850
Bristol 800
Allianz Insurance Inner London 4,008 No No
1.5.04 Guildford and Woking 1,260
Chelmsford, Luton, Maidstone,
Tunbridge Wells 825
Bristol, Liphook, Southampton 540
Aviva 0–3 miles 3,710 No No
1.4.01 3 miles to M25 1,725
Royal & SunAlliance Inner London (0–4 miles) 3,750 No No
1.4.01 Outer London (4 miles to M25) 1,725
Zurich Financial Services Inner London 3,200 No Yes
1.4.00 Outer London (Heathrow, Sutton,
Watford) 1,700
Brighton, Chelmsford, Guildford,
Maidstone, Slough 825
Retail
AJT Trading London (including Staines) 1,170 No No
Branch sales staff
1.2.97
Argos Zone F £1.26ph* (£1.28) Yes Yes *Differential over Zone A/B rate
Sales assistants Zone E 99pph (£1.01)
1.10.09 Zone D 74pph (76p)
Zone C 30pph (32p)
Examples of locations:
Zone F: Holborn, Kensington, Marble Arch, New Oxford Street, Whitechapel Road
Zone E: Brixton, Peckham, Shepherds Bush, Wandsworth, Wimbledon
Zone D: Crawley, Leatherhead, Reading Forbury, Staines, Woking
Zone C: Camberley, Harrogate, Leighton Buzzard, Romford, Welwyn Garden City
Asda London 84pph* (83p) Yes Yes *Differential between London and provincial
Hourly-paid staff in stores established hourly-pay rates
South East, Home Counties that have
1.10.08
stores with specific recruitment
problems 42pph (41p)
B&Q Zone I £2ph* No No *Differential over provincial zone A
Customer advisors Zone F £1.25ph
1.2.03 Zone E £1ph
Zone D 75pph
Zone C 50pph
Zone B 25pph
Blackwells Inner London 2,750 Yes No
1.3.02
Boots The Chemists Pay zone 4 £1.72ph* (£1.73) Yes Yes *Differential over Zone 1 provincial rates
Sales assistants (experienced) Pay zone 3 86pph (89p)
1.6.09 Pay zone 2 54pph (53p)
Organisation & effective date Location Allowance Pen Enh Other information
Boots The Chemists (cont’d)
Locations are as follows:
Zone 4: Bloomsbury, Brent Cross, Camden Town, Canary Wharf, Chiswick, Covent Garden, Hammersmith, Heathrow Airport, Holborn, Kensington, Paddington Station, Pimlico,
Westminster
Zone 3: Brixton, Cambridge, Chichester, Dorking, Feltham, Godalming, Guildford, Hemel Hempstead, Leatherhead, Maidenhead, Oxford, Potters Bar, Reading, Rickmansworth,
Ruislip, Sevenoaks, Slough, Southend-on-Sea, Staines, Tunbridge Wells, Twickenham, West Thurrock, Wimbledon, Windsor, Woking
Zone 2: Aberdeen, Aldershot, Ashford, Bath, Basingstoke, Birmingham, Bournemouth, Brighton, Bristol, Bury St Edmunds, Canterbury, Cardiff, Eastbourne, Edinburgh, Folkestone,
Harrogate, Henley, Leamington Spa, Maidstone, Milton Keynes, Northampton, New Malden, Peterborough, Portsmouth, Purley, Shrewsbury, Sidcup, Stoke-on-Trent,
Sutton Coldfield, Swansea, Telford
Borders UK Band 1 80pph* Yes Yes *Differential over Band 3 and 4 (regional pay
Booksellers Band 2 35pph scale) for staff at starting rate
1.4.09
C&J Clark International Zone F 82pph* (80p) *Differential over Zone A/B, the lowest
Sales team members Zone E 18pph provincial rate for over 18s
1.4.09 Zone D 8pph
Zone C 6pph
Comet Zone 5* 3,000 Yes No *Differentials over the provincial pay zone
1.7.02 Zone 4 2,000 Although the pay structure is divided into
Zone 3 1,350 zones, location allowances are still considered
Zone 2 500 as supplements to basic pay
A ‘scarce skills premium’ was introduced for
‘white goods’ engineers employed in the
South East from 1.7.03 aimed at tackling
recruitment and retention pressures on these
staff. The premium is incorporated into basic
salary
Early Learning Centre Pay province 5 73pph* Yes Yes *Differential over pay provinces 1 and 2 for
Retail staff Pay province 4 62pph retail staff aged 18 and above
1.5.09 Pay province 3 22pph
Location examples:
Pay province 5: Central London – Chelsea, Kensington (total of two stores)
Pay province 4: Outer London – Bluewater, Milton Keynes, White City (total of five stores)
Pay province 3: South East, large cities and out-of-town locations – Brent Cross, Manchester (total of 33 stores)
Homebase Zone 5 45pph* Yes Yes *Differentials over zones 1, 2 and 3 for sales
Sales assistants Zone 4 15pph assistants paid at the standard rate
1.4.08
Location examples:
Zone 5: Crawley, Exeter, Harrogate, Kingston, Milton Keynes, Richmond, Slough, Staines, Woking
Zone 4: Cambridge, Ewell, Hatfield, Kensington, Sevenoaks, Watford
Organisation & effective date Location Allowance Pen Enh Other information
Ladbrokes Central London £1.26ph Yes No *This allowance is also paid in some other
Shop managers & deputies Inner London (eg Peckham, Brixton, locations (eg Oxfordshire, Hertfordshire, Kent)
1.3.02 Plaistow) 99pph to assist recruitment
Outer London (eg Hounslow, Edgware) 66pph All shop staff working five days a week and
South East* (eg Bromley, Romford) 38pph over 21 hours within central London are
eligible to apply for a free travelcard after
Cashiers (1.3.02) & trainee deputy Central London £1.75ph three months’ service (this is a taxable benefit)
managers (1.3.05) Inner London £1.32ph
Outer London 94pph
South East* 48pph
Makro Self-Service London* 71pph (69p) Yes Yes *Also includes Reading
Wholesalers Provincial allowance (Glasgow, Bristol,
Shopfloor staff Edinburgh, Rayleigh) 26pph (25p)
1.7.08
Marks & Spencer Oxford Street £1.55ph Yes Yes Each store falls within one of six location
Sales adviser Inner London £1.00ph zones. Any store that believes it merits a
1.10.05 Other inner London and key ‘hot spots’ higher location premium must present its case
in the South 74pph to the Reward team. A decision is then made
Outer London 46pph on the basis of the comparative pay and
Other key ‘hot spots’, North and benefits for the area, recruitment difficulties
Central England 28pph and staff turnover
Mothercare Pay band 1 £1.36ph* Yes Yes *Differential over pay band 5, the lowest
Customer service advisers Pay band 2 63pph provincial rate
22.6.08 Pay band 3 38pph
Pay band 4 10pph
Location examples:
Pay band 1: Brent Cross, Oxford Street, Watford, Weybridge (total of four shops)
Pay band 2: Douglas, Jersey, Milton Keynes, Thurrock (total of 12 stores)
Pay band 3: Avon Meads, Gateshead, Newbury, Oxford (total of 39 stores)
Pay band 4: Canterbury, Edinburgh, Stevenage, Swindon (total of 29 stores)
Next Retail Zone 4 (Central London) £1.30ph* Yes Yes *From 1.2.07, zone 2 (major UK cities) was
Sales consultant merged with zone 1 (national rate). The
1.2.09 Zone 3 (Outer London and large South figures shown are the hourly differential over
East towns) 33pph (34p) the basic national rate (ie Zone 1/2) for adult
new starters
Stores are allocated to zones on the basis of
location
Location examples:
Zone 4: Bond Street, Covent Garden, Ealing, Holborn, Kensington, Oxford Street, Wood Green
Zone 3: Basildon, Cambridge, Enfield, Gatwick, Ilford, Kingston, Maidenhead, Oxford, Slough, Uxbridge, Watford
Peacocks Stores London 33pph* (38p) Yes Yes *Differential over standard pay rate
Sales assistant (after six months’ Exceptions** 70pph (74p) **Difficult to recruit areas
service)
1.10.08
Managers and assistant managers Inner London (inside inner ring road) 3,000 No No
1.4.05 Outer London (inside M25) 2,000
Pret A Manger Airport outlets** 75pph* No Yes *Differential over national rates
6.7.07 **Includes Heathrow T1, T3 and T4, Luton
and Stansted
Sainsbury’s Band 5 85pph** Yes Yes *Base rates increased from 6.9.09;
Hourly-paid staff in stores Band 4 63pph differentials unchanged
6.9.09* Band 3 51pph **Supplement on band 1 rate
Band 2 25pph
Organisation & effective date Location Allowance Pen Enh Other information
Sainsbury’s (cont’d)
Locations are as follows:
Band 5: Camden, Chiswick, Cobham, Cromwell Road, Finchley Road, Fulham, Guildford, Islington, Pimlico, Richmond, Surbiton, Sury Basin
Band 4: Bishops Stortford, Burpham, Colney Park, Crawley Central, Fulham Broadway, Horsham, Kilburn, Kiln Lane, Kings Mall, Loughton, New Barnet, Thorley, Walthamstow,
Walton-on-Thames, West Green, Whitechapel
Band 3 includes: Avenue Road Local, Balham, Barnes Local, Basingstoke, Battersea Park Local, Beaconsfield, Borough High Street Local, Bracknell, Charing Cross Local, Chesham,
Clapham, Crystal Palace, Dalston, Didcot, Farnborough, Godalming, Golders Green, Harrogate, Haywards Heath, Holborn Central, Paddington Station Local, Pinner, Reading,
Romford, Sevenoaks, Tottenham, Tunbridge Wells, Uxbridge, Victoria
Band 2 includes: Alton, Aylesbury, Banbury, Blackhall, Brentwood, Cold Bath Road Local, Coldhams Lane, Harlow, Heyford Hill, High Wycombe, King’s Road Local, Knaresborough
Local, Meadowbank, Murrayfield, Northgate, Oxford, Sidney Street, Slough, Welwyn Garden City, Witney, Woodhall Farm
Somerfield Stores Level 5* 65pph** Yes Yes *The level at which a store is paid is
Customer assistants and determined by a number of factors including:
Level 4 40pph
supervisors location; local competition; recruitment
1.10.05 Level 3 15pph difficulties; prosperity within the area; local
crime rate
**Differential over levels 1/2
Superdrug Inner London £1.01ph * Yes Yes *Differential over provincial rate.
Sales staff Outer London 36pph While described as inner and outer London
1.10.08 Large cities 10pph allowances, these payments are now used for
other locations where there are recruitment
Managers Premium 2 (Inner London) 2,500 to 7,700 Yes No difficulties, such as Milton Keynes
1.10.08
Premium 1 (Outer London) 550 to 4,000
City 550 to 4,000
Waitrose Pay zone 4 71p to 89pph* *Differential between London and provincial
Retail staff (adult recruitment (70p to 92p) top rate, depending on job and grade
range) Pay zone 3 36p to 57pph Waitrose does not apply separate or specific
1.4.09 (36p to 56p) location allowances to its store pay rates.
Pay zone 2 17p to 22pph Instead, it has four, broadly regional, pay
(14p to 22p) zones and within each of these, individual
stores agree their own recruitment rates for
the year at the annual pay review according to
the local market and their ability to recruit
high-calibre applicants
Examples of pay zone locations:
Pay zone 4: Belgravia, Bloomsbury, Gloucester Road, Holloway Road, King’s Road, Marylebone
Pay zone 3: Beaconsfield, Canary Wharf, Esher, Kingston, Rickmansworth, South Harrow, West Ealing, Windsor
Pay zone 2: Banstead, Harpenden, Marlow, Petersfield, Reading, Sevenoaks
Waterstone’s Zone A: Central London 2,900 Yes Yes *Employees at the company’s store at
1.5.07 Manchester Airport are paid the zone C rate
Zone B: Inner M25 1,700
Zone C: Outer M25* 1,000
WH Smith Zone H £1.40ph Yes No* *Location allowance is not paid on any
1.9.02 overtime worked over 39 hours
Zone G £1.25ph
**Paid to store staff only at this location
Zone F £1.00ph
Zone E 75pph
Zone D 60pph
Zone C 40pph
Zone B 20pph
Locations are as follows:
Zone H: Oxford Street
Zone G: Baker Street, Douglas (Isle of Man)**, Fleet Street, Hammersmith, Holborn Circus, Kensington, Kingsway, Leadenhall, Notting Hill Gate, Sloane Square, Strand
Zone F: Brixton, Elephant & Castle, Fulham, Jersey**, Kilburn, Peckham, Richmond, South Hampstead, Surrey Quays, Wimbledon
Zone E: Bluewater Park, Brent Cross, East Sheen, Kingston upon Thames, Putney, Thurrock, Wandsworth, Watford Harlequin
Zone D: Balham, Barnet, Beckenham, Bromley, Catford, Chiswick, Croydon, Ealing, Enfield, Forest Hill, Golders Green, Greenford, Greenwich, Harrow, Hounslow, Ilford, Lewisham,
Mill Hill, Muswell Hill, North Finchley, Palmers Green, Reading, Romford, Sevenoaks, Slough, Staines, Stratford East, Streatham, Sutton, Temple Fortune, West Ealing, West
Wickham, Willesden Green, Windsor, Wood Green, Woolwich
Zone C: Barking, Beckton, Bexleyheath, Bracknell, Camberley, Cambridge, Caterham, Cheam, Crawley, Dagenham, Dartford, East Ham, Edgware, Eltham, Epsom, Farnham,
Gerrards Cross, Godalming, Guildford, Harpenden, Hayes, Hemel Hempstead, Henley on Thames, High Wycombe, Loughton, Maidenhead, Marlow, New Malden, Orpington,
Oxford, Pangbourne, Radlett, Rickmansworth, Ruislip, St Albans, Swindon, Tonbridge, Trafford Centre (Manchester), Tunbridge Wells, Uxbridge, Wallington, Walton on Thames,
Weybridge, Worcester Park, Woking, Wokingham
Zone B: Aylesbury, Basildon, Basingstoke, Beaconsfield, Berkhamstead, Brentwood, Brighton, Cowley, Cribbs Causeway, Dorking, East Grinstead, Grays, Gyle, Haywards Heath,
Horsham, Hove, Leatherhead, Luton, Maidstone, Milton Keynes, New Mersey, Newbury, Redhill, Waltham Cross, Welwyn Garden City
Organisation & effective date Location Allowance Pen Enh Other information
Wilkinson (Home & Garden) Labour market top-up:* Yes Yes *Used in stores where there is a tight labour
7.4.03 Level 1 50pph market, such as inner and outer London and
Level 2 25pph the Thames corridor
Organisation & effective date Location Allowance Pen Enh Other information
Kodak Central London 3,461 (3,436) No No
1.1.09
Other manufacturing
Corus Millbank office 4,350 Yes No
1.10.06
Construction
Electrical Contracting JIB Within M25 £1.55 to £1.64ph* Yes Yes *Differential between standard and London
5.1.09 (£1.49 to £1.57) rate for approved electricians. First figure
applies if company provides transport; second
figure, if individual provides own transport
Heating, Ventilating and Daily travel allowance* *This higher scale of daily travel allowance,
Domestic Engineering JCC Direct distance from residence to job: introduced in April 2005, is payable only to
Craftsmen/installers 0–15 miles £6.69 a day those operatives whose permanent home
6.10.08 15–20 £9.13 a day address and centre are within the M25
20–30 £12.97 a day Operatives who qualify to receive it may work
30–40 £15.73 a day at jobs within or outside the M25
40–50 £18.59 a day Operatives who live outside the M25 can
qualify for a daily travel allowance if they are
required to travel to a job or lodge within the
M25. These rates (from 3.9.07) are 15–20
miles, £2.44; 20–30 miles, £6.28; 30–40
miles, £9.04; 40–50 miles, £11.91
Thermal Insulation 0–35 miles £1.43 per day* *London supplement to main travelling
Contracting NJC (£1.26) allowances, which ranges from £2.87 (£2.49)
1.1.09 a day for distances between 5 and 10 miles to
£20.84 (£18.15) a day for a labourer and
£21.68 (£18.88) for a thermal insulation
engineer travelling distances between 30 and
35 miles. For distances over 10 miles the total
allowance comprises a taxable and a tax-free
element
Organisation & effective date Location Allowance Pen Enh Other information
Home Delivery Network Inner London (Gatwick, New Cross, No No
30.6.09 Romford) £46.58pw (£47.05)
Outer London (Hitchin, Maidstone) £23.80pw (£24.43)
Wembley, Mitcham and Woodford £46.58pw (£45.45)
Reading £46.58pw (£43.51)
National Express East Coast Inner London* 2,360 (2,280) Yes Yes *Home station King’s Cross or Bounds Green
1.4.09 Outer London** 1,060 (1,022) Depot
**Home station Stevenage
Second year of a 2-year deal
Network Rail Inner London Yes No
1.4.09 (0–16 miles) 2,400 (2,250)
Outer London
(16–40 miles) 1,323 (1,240)
South East (M25 corridor) 859 (805)
Parcelforce
CWU grades Inner London 3,639 Yes No
1.7.08 Outer London 2,158
Organisation & effective date Location Allowance Pen Enh Other information
South West Trains Inner London 1,949 (1,860) *Difference between pay for drivers and front-
Front-line staff (including clerical, Outer London 874 (834) line staff due to percentage increase applied
station, and revenue protection South east 415 (396) across the board
staff)
1.10.08
Drivers* Inner London 1,931 (1,851)
1.10.08 Outer London 866 (830)
South East 411 (394)
Other services
British School of Motoring Greater London 3,061 Yes No
1.1.08 Home Counties 1,581
Camelot Central London office 3,500 No No
1.4.02
Jarvis Hotels South East (Central London and Yes Yes *The London differential is only paid to
15.10.06 M25 hotels) 14pph* employees in the lowest grade
Otis Channel Islands 4,810 (4,774) Yes No
1.9.09 London branches 2,704 (2,684)
Not-for-profit
Advance Housing & Support Outer London 1,483 Yes Yes
1.4.07 Inner Fringe & Home Counties 1,051
Age Concern England Norbury 2,972* (2,935) Yes Yes *Former freestanding allowance consolidated
1.4.09 into basic pay from 1.4.09
Barnardo’s Inner London 3,299 (3,266) Yes No
1.4.09 Outer London 1,755 (1,738)
Inner Fringe 798 (790)
Outer Fringe 555 (550)
Blue Cross London (Victoria, Merton, 3,506* (3,371) No No *An extra £1,219 (£1,172) is also paid to
1.1.09 Hammersmith) employees earning under £24,000 (£23,435)
**For employees earning less than £18,278
Regional allowance (Burford, 366** (352)
(£17,575)
Cambridge, Kimpton, Lewknor,
Northiam, Southampton)
British Association for London 3,267 (3,181) Yes *Currently under review
Adoption & Fostering
1.4.08*
Choice Support Inner London 2,600 Yes No An overtime rate of £8ph is paid in London,
1.10.08 Buckinghamshire 2,000 Bucks and Hants, compared to £7 elsewhere
Hampshire 2,000
Citizens Advice London 3,434 (3,340) Yes Yes *Currently under negotiation
Head office staff
1.8.08*
Help The Aged Within M25* 5,135 (5,027) Yes** Yes *Help the Aged’s head office is located in
1.5.09 London N1
**Optional
Organisation & effective date Location Allowance Pen Enh Other information
Johnnie Johnson Housing Hertfordshire 6.3% of basic salary Yes Yes
RNID Inner London 2,750* Yes Yes *Differential over national pay rate.
1.4.02 Outer London 1,100 Allowances were incorporated into basic pay
from 1.4.05
Former freestanding allowances of £3,197 for inner London, £1,694 in outer London, £766 for inner fringe and £527 for outer fringe consolidated into basic pay from 1.4.09.
Starting salaries and pay increases will reflect regional employment markets.
Turning Point Inner London (inside London Boroughs) 3,561 (3,468) Yes Yes
1.4.09 Outer London (within M25) 1,689 (1,641)
Fringe 708 (687)
Victim Support Central London 2,800 Yes Expressed as a London salary differential
1.4.07 Outer London 1,800
Public services
Acas London 4,000* Yes Yes *Differential between London and national
1.8.04 scales at each step
Arts Council England National office (Westminster) & London 3,470 Yes
1.4.09 Arts office (Farringdon)
Corporation of London Inner London (0–6 miles) 4,730 (4,610) Yes No *Currently under review
Non-resident staff Outer London (more than 6 miles) 2,840 (2,770)
1.8.08*
Department for Business, London differential** 3,500 Yes Yes *Currently under review
Innovation & Skills **Differential between London and national
(formerly Department for scale at all points
Business, Enterprise and Market-related pay enhancements are paid to
Regulatory Reform) staff in specialist roles actively using certain
1.8.03* skills
Department for London differential* 2,518 to 5,820 Yes Yes *Differential between London and national
Environment, Food and Rural scales depending on grade
Affairs
Pay ranges A–J
1.7.09
Organisation & effective date Location Allowance Pen Enh Other information
Department for Work and Inner London* 3,490 to 5,280 Yes Yes *Differential between London and national
Pensions (3,460 to 5,220) scales based on maximum payment for each
Admin assistant (min) to grade 6 Outer London** 2,340 to 4,310 band, depending on grade
(max) (2,320 to 4,260) ** Covers areas within 20 miles of Charing
1.7.09 Specified location pay zone (SLPZ)*** 1,840 to 3,830 Cross
(1,820 to 3,790) ***The SLPZ zone includes the following
South East locations: Abingdon, Aylesbury,
Bedford, Biggleswade, Bletchley, Brighton,
Cambridge, Chesham, Didcot, Dunstable,
High Wycombe, Luton, Milton Keynes,
Newbury, St Neots, Swindon, Witney. Many of
these sites previously received recruitment
and retention payments
Employees work 36 hours in London, 37
elsewhere
Department of Health Inner London differential* £3,350 (£3,200) Yes Yes *Differential between London and national
1.8.09 Outer London differential £1,675 (£1,600) pay scale
Environment Agency Inner London 3,372 (3,306) Yes No
1.7.09 Outer London 1,672 (1,639)
Fire Service Up to former GLC boundary 4,959 (4,840) Yes No *Currently under review
1.7.08*
1.9.03 Surrey 1,213
1.4.09 Langley & Slough 790 (769)
Bracknell, Maidenhead & Windsor 550 (535)
Further Education Inner London 2,864 ** (2,775) Yes Yes *The Association of Colleges (AoC) no longer
Lecturers Outer London 1, 878 (1,820) sets London allowance figures. Colleges may
1.10.08* Fringe 740 (717) choose to increase their allowances in line
with the annual pay award but there is local
variation
**The figures given here were derived by
applying every AoC-recommended increase to
basic salary since the last time separate
London weighting figures were published in
2002. They then stood at £2,385 (inner
London), £1,566 (outer London) and £616
(fringe)
Health and Safety Executive London weighting 3,837 (3,762) Yes No Employees work 41 hours gross in London,
1.10.08 42 elsewhere
HM Land Registry London differential** 3,060 to 3,978 Yes Yes *Currently under review for 2009
Registration assistant to senior (3,000 to 3,900) **Differential between London and provincial
registration administrator Inner London (Holborn) 2,448 (2,400) Yes No scales
1.6.08* The inner London allowance is paid in
addition to the London scales
HM Revenue & Customs London differential** 2,186 to 5,498 Yes Yes *Currently under review
HMRC harmonised pay scale (2,596 to 5,337) **Differential between London and national
Administrative assistant to large scales based on a minimum payment for each
business team leader pay band
1.6.08*
Home Office London differential* 535 to 3,590 Yes Yes *Differential between London and national
Administrative assistant to Grade 6 (526 to 3,535) scales depending on grade (based on ‘target
1.7.09 rates’), paid in addition to the London location
allowance. There are separate pay ranges for
staff based at Gatwick.
1.7.08 London locational allowance: Recruitment and retention allowances may be
Inner London 3,020 paid to recruit to specialist grades with
Intermediate London 1,710 marketable skills or ‘pockets’ of problems in
Outer London 1,240 generalist grades
Employees work 41 hours gross in London, 42
elsewhere
Identity & Passport Service London differential* 3,910 to 6,008 Yes Yes *In April 2007, the IPS incorporated its
P01 to grade 6 (4,093 to 5,760) London location allowance into its pay scales.
1.8.09 The organisation now has separate London
and national pay scales for each grade – the
figures given are the differential in minimum
pay rates depending on grade
Organisation & effective date Location Allowance Pen Enh Other information
Local Authorities Inner London* 3,299 (3,267) *The national agreement continues to set
1.4.09 Outer London* 1,775 (1,738) London fringe area allowances. The NJC also
Inner fringe* 798 (790) publishes advisory amounts for inner and
Outer fringe* 555 (550) outer London allowances for its subscribers
based on the former APT&C agreement
Met Office Inner London (0–10 miles) 2,789 (2,695) No No *Currently under negotiation
1.7.08* Outer London (11–18 miles) 1,470 (1,420)
Ministry of Defence Inner London recruitment & retention Yes No From 1.8.07 all London-based staff not in
Non-industrial staff (RRA) allowance 2,700 (2,500) receipt of the London RRA receive an
1.8.09 additional 2.5% step on the first movement
Outer London RRA allowance 1,250 (1,200) towards creating a London pay lead
National Air Traffic Services Inner London 4,189 (4,067) Yes No *Paid to staff at a few of the organisation’s
1.1.08 Outer London 1,918 (1,862) more inaccessible sites
Remote Radio Station Allowance* 682 (662)
National Audit Office London differential 5,245 to 5,376* Yes Yes *Differential between London and provincial
Assistant auditor scales depending on scale point
1.4.09
National Health Service Inner London 20% of salary* – Yes No *The ‘high-cost area supplements’ introduced
1.4.09* minimum payment under Agenda for Change apply to all NHS
of 3,947 (3,855), staff, except those covered by the Doctors’
maximum of 6,080 and Dentists’ Pay Review Body and very senior
(5,938) managers
Employers also have scope to pay recruitment
Outer London 15% of salary – and retention premia. These can be awarded
minimum payment either on a national or local basis or both, but
of 3,339 (3,261) in total would not normally exceed 30 per
maximum of 4,256 cent of basic salary. They can be awarded on a
(4,156) short-term or long-term basis.
Fringe 5% of salary –
minimum payment
of 912 (891),
maximum of 1,581
(1,544)
Police London weighting 2,220 (2,106) Yes No Inspectors and chief inspectors have higher
Police officers London allowance 4,338* No No London pay scales
1.7.09 *Paid in addition to London weighting for
staff in post after 1.9.94. Staff in post before
1.4.01 Essex, Hertfordshire, Kent, Surrey, this receive a housing allowance (worth an
Thames Valley 2,000** No No average of £5,430 for Met Officers)
Bedfordshire, Hampshire, Sussex 1,000** Free rail travel is provided to serving officers
within 70 miles of London
Professional & support staff Inner London 3,379 (3,209) Yes No **Allowances payable to officers recruited
(Metropolitan Police) Outer London 1,836 (1,745) since September 1994 not in receipt of
1.4.09 housing allowances (worth, for example, up
to £4,275 for officers in Essex and up to
£3,438 for officers in Surrey)
Special Priority Payments (SPPs) are available
and can range from £500 to £3,000 or up to
£5,000 in exceptional circumstances
Organisation & effective date Location Allowance Pen Enh Other information
Prison Service (cont’d)
Locations are as follows:
Band 1: Brixton, Holloway, Pentonville, Wandsworth, Wormwood Scrubs
Band 2: Feltham, Huntercombe, Latchmere House, The Mount, Prison Service HQ (Westminster)
Band 3: Belmarsh, Bronzefield, Coldingley, Downview, High Down and Send South Central Area Office (Woking)
Band 4: Aylesbury, Bedford, Bullingdon, Bullwood Hall, Chelmsford, Grendon, Croydon HQ, Reading, Woodhill, South Central Area Office (Aylesbury)
Band 5: Lewes, Winchester
Band 6: Birmingham, Bristol, Littlehey, Long Lartin, Onley
Probation Service London 3,800 (3,700) Yes Yes
1.4.09
Sixth-Form Colleges Inner London 3,508 (3,424) Yes *Currently under negotiation
Teachers Outer London 2,338 (2,282)
1.9.08* Fringe 926 (904)
Valuation Office Agency London differential 2,330 to 6,717 Yes Yes *Differential between London and provincial
Band 6 (min) to Band 1 (max) (within M25)* (2,255 to 6,585) scales, depending on pay band
1.8.08
Organisation & effective date Location Allowance Pen Enh Other information
Valuation Office Agency Special circumstances location 1,200 Yes Yes **Differential over provincial scales for offices
(cont’d) allowance** in areas with recruitment and retention issues
in certain pay bands. Offices in this category
Inner London Premium Payment 1,050 Yes Yes are located in Aylesbury, Bristol, Cambridge,
(0–5 miles) Guildford (Godalming), Oxford, Reading and
Tunbridge Wells
Band-specific allowance for band 3 500 Yes Yes
staff in London
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