We believe in happy people making happy soap… it’s right there in our We Believe, the guiding statement for our business for the last 30 years. We know people are at the heart of our business, and it feels right that our ethical charter includes a commitment to our people too.
Staff Wages
Globally we can split staff wages into three categories*:
- Where the rate we pay is decided by a Living Wage Foundation or Body, our decision is to continue paying the living wage rate but we don’t decide the rate itself. The Living Wage Foundation has some great information on how the UK rate is calculated. We pay living wage rates in the UK, Ireland and Aotearoa.
- Where base wage rates are negotiated as part of a collective agreement or collective bargaining. These rates are compulsory, so any increase in these markets is out of our hands. There are lots of markets where wages are decided this way, including Austria, Spain, Italy, Sweden and the Netherlands.
- Where we decide our rates of pay based on our commitment to pay above the minimum wage, as set out in our Ethical Charter.
*We also have a couple of markets where none of the above apply. For example, there’s no minimum wage in the UAE or Bahrain.
Opportunity for progress in this principle lies where we control the rates of pay and have committed to being above the minimum, although we haven’t committed to being a specific amount above the minimum wage or to an annual review of wages in any of our markets. We aspire to be a living wage employer globally. The Living Wage Foundation does not operate globally so other assessment measures can be used. Internationally, a target widely used is for minimum wage to reach 60% of the gross median income. In the UK you must be school leaving age to get the National Minimum Wage, and aged 21 years or over to get the National Living Wage. The UK government currently targets their Living Wage at 66% of the median income, with the 2024 government falling slightly short at 65% of the median wage. This is an hourly rate of £11.44, which also falls short of the rate set by the UK Living Wage Foundation which is £12.00.
Spotlight on Living Wage in the United Kingdom
We committed to paying the London Living Wage in 2011. Back when we first signed up to the London living wage, the rate was £7.85 per hour. It is now £13.85 per hour, an increase of just over 76% since we first adopted the rate. For comparison a Big Blue bath bomb cost £2.99 back in 2011 and now costs £4.50, an increase of 50% over the same period. The next step in this journey was paying the UK wide living wage in 2017. This was a huge milestone for our business — and our staff — and something to really be celebrated. We continued this commitment through the Covid-19 Pandemic, multiple lockdowns and long periods where our stores could only trade as a kiosk or had tight restrictions on the number of shoppers at any one time. We maintained this commitment even through pandemic losses, spending an additional £10 million on raising wages of our lowest tier over FY2023-2024 despite making losses both years. We also pay a living wage in Ireland and Aotearoa.
In 2022, minimum wages represented over 60% of median gross earnings for full-time and part-time workers in only three European Union (EU) countries: France, Portugal and Slovenia. Minimum wage ranged from 50% to 60% of median gross earnings in 14 EU countries: Greece, Poland, Luxembourg, Romania, Croatia, Hungary, Netherlands, Bulgaria, Germany, Spain, Slovakia, Czechia, Ireland and Lithuania. In four EU countries, Belgium, Malta, Estonia and Latvia, the minimum wages were less than half of the median gross earnings.
Minimum Wage Statistics from Eurostat
This information gives us a great benchmark to determine where we might be meeting our commitment to the Ethical Charter — to exceed government minimum standards in staff wages — but also highlights where perhaps measuring ourselves against the minimum wage in many markets is too low. It is important to remember that committing to exceeding government minimum rates of pay, or even reaching 60% of the median income in a country, does not guarantee that the rate of pay is a real living wage for employees.
Minimum Wage Relative to Median Average Wages of Full Time Workers in %
This second table tells us that the minimum wage in the USA is just under 26% of the median income in the country and for Czech it is only 43.8% of median income. As mentioned earlier, a widely used target for minimum wage globally is to be 60% of the median income. So for both countries, the minimum Lush rate is double the federal minimum wage. In the last few years we’ve looked hard at installing a living wage in our North American business. Without an organisation like the Living Wage Foundation at a national level, establishing what that rate of pay should be isn’t easy, and we’ve tried. Across the United States the federal minimum wage is just $7.25 per hour and remains unchanged since 2009 — clearly not a useful benchmark. However, many states have their own minimum wage rates, which go far beyond the federal minimum. In April 2024, we committed to a $15 dollar minimum wage, across the US and Canada, with rates of pay ranging from $15 to $22 depending on location, a big financial commitment from the business.
Defining Our Conditions
Our Ethical Charter is a living document, and as part of our Employee Benefit Trust, colleagues can hold the business accountable to our commitments. This principle mentions ‘exceeds government minimum standards of pay and conditions’, but it doesn’t clarify what is meant by conditions.
In September 2024, a colleague questioned whether we are in breach of the ethical charter in the UK when it comes to pensions as Lush is currently paying the statutory contribution of 3% which, could be argued, does not ‘exceed’ the minimum requirement. When the ethical charter was written, the required contribution was 1% and Lush paid 2% but now the government requirement has caught up. This prompted an internal review of what is meant by conditions and EBT trustees are currently reviewing whether this represents a breach of the Ethical Charter. If it is decided that this is a breach, what remediation looks like and whether the principle needs further clarification will need to be determined. It is worth noting that according to the Living Wage foundation in the UK, those earning the living wage must save 12% per month to save for a Living Pension. They define that as 5% from employees and 7% from employers.
Flexibility
Committing to ‘exceed the government minimum standards’ allows us the flexibility to increase the gap to minimum wage when we’re doing well, but reduce that gap when times are tougher. Germany is a great example of this over time. The minimum wage was first introduced in Germany in 2015. At this time minimum wage was €8.50, and it has increased significantly to €12.41 in FY24. During this time, the base Lush Pay varied from 0.7% above minimum wage briefly to 14.6% above minimum wage, averaging 6.3%, according to the health of the business.
Bonus
Although bonus isn’t specifically mentioned in the Ethical Charter, it is a founding principle of our Employee Benefit Trust (EBT). Maintaining a bonus culture is one of three key principles behind having a shared ownership scheme — our EBT. Bonus plays an important role when we think about exceeding the minimum standard of staff wages, as it allows our employees to instantly benefit more as our business grows. Even in FY2020, when stores closed around the world because of the global pandemic, we paid out 4% of sales in bonus. In years where the business is growing and we have more wealth to share, bonus payments are also higher. For example in FY2017, which saw a sales growth of over 20% on the previous year, bonus payments were 14% of sales.
In FY2024, despite finishing the year in a loss making position (profit before tax), we paid out an average of 5% of sales in bonus across the Lush Group.
Going Forward
We’re exploring how to better define what ‘fair conditions’ means across all our markets. Every country has different standards and while some have amazing benefits, others fall short of what people need. One approach we’re considering is to identify the key areas where our people need support, then develop consistent minimum Lush standards. Areas like fair sick pay when you’re unwell, proper holiday time, support when you become a parent, pension contributions for your future, and time to grieve when you need it.
Rather than just meeting varying local minimums, we’re looking at whether we could create consistent Lush standards that ensure everyone gets the support they deserve, no matter which country they work in. With parental leave we are almost there. We’re also considering whether annual pay reviews should become standard practice, recognizing that the cost of living doesn’t stand still. These are the conversations we’re having as we work to strengthen our commitment to fair conditions for everyone who works with us.
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