IDS HR Study 853, September 2007

London allowances

• Summarises the major sectoral trends in London and other location allowances, paying particular attention to finance, public services and retail

• Covers some of the alternative pay options available to organisations seeking to address recruitment and retention difficulties in tight labour market areas

• Includes a sector-by-sector guide to London, South East and other location allowances, with entries for 148 named organizations

Employers are now using a wide range of tactics, alongside traditional London weighting payments, to recruit and retain employees in the capital and other high-cost areas of the country. This has made it increasingly hard to pinpoint the exact value of a London ‘premium’.

This HR Study considers and provides examples of the free-standing allowances still favoured by many organisations, as well as some of the other methods that employers choose to operate either alongside or instead of these, including:

• separate, higher pay scales for London

• zonal pay systems, with particular locations slotted in on the basis of labour market pressures
• nationwide broadbanded structures, with the scope to vary pay levels according to location in lien with ‘market salary guides’
• various forms of ‘recruitment and retention’ or ‘hot spot’ supplements
• the use of grading flexibilities within existing pay spines.

The publication details the locations that qualify for allowances – both inside and outside London – and the accompanying levels of payment in 143 named organisations. Any recent changes are highlighted.