The Guidelines for Auditing establish the minimum procedures for auditing wage data and living wage gaps, which have been agreed among the standards and certification systems that IDH recommends.
The Base Report serves as the physical evidence to support auditors’ verification of wage data and living wage gap calculations.
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IDH has established a partnership with the Impact Buying Academy to provide training for auditors and trainers of auditors.
The auditor training aligns with the Guidelines for Auditing and provides them with a practical understanding of how the Salary Matrix works and its guiding principles.
Auditors that have been trained, passed the necessary exams, and maintained their credentials are listed on the Impact Buying Academy website, here. These auditors are linked to the auditing organizations that IDH recommends companies to use. Read about the training
Tools for facilities and buyers
Salary Matrix Learning Site: IDH provides training and guidance materials on how to use the Salary Matrix, which is the preferred tool for calculating living wage gaps. You can find the training videos, Salary Matrix user manual, FAQs, and a link to register for live Q&A sessions at the Salary Matrix E-Learning Site.
Salary Matrix data completeness checks: IDH recommends independent organizations to perform checks on Salary Matrix data, either remotely or on-site. The data check process involves a desk-based review of submitted Salary Matrix data, followed by interviews with facility managers. The process helps ensure that the data has been entered according to the Salary Matrix guidance. It is a useful step for preparing facilities ahead of audits, or to inform projects aimed at closing living wage gaps before Salary Matrices have been verified. You can find organizations to conduct data checks here.
The verification of remuneration and living wage gaps is crucial to support credible claims about living wage progress. Audits designed to provide this verification necessarily involve on-site assessments, and include four equally important components:
- Review of documents
- Interviews with management
- Interviews with workers and their representatives
- First-hand observations
Independent, third-party verification of living wage gaps can support more meaningful and credible claims, as well as continuous wage improvement.
Ideally, audits should be performed with oversight by independent organizations, and as part of systems that provide dispute resolution mechanisms and improvement opportunities for auditees. Many Voluntary Sustainability Schemes (VSS) can provide these systems. However, living wage gaps may also be audited outside of these systems.
IDH and its partners provide tools to support the auditing of living wage gaps, along with tools to help prepare companies and worker representatives for verification processes.
Facilities complete a self-assessment of living wage gaps by entering wage, bonus and benefits data into the Salary Matrix (or equivalent tool), and comparing the results to living wage benchmarks. This data is then shared with auditors as a pre-requisite for auditing.
Auditors review records, including worker contracts, time records, payroll systems and pay stubs to compare against the wages, bonuses and benefits that are entered into the Salary Matrix. They interview facility managers and HR staff to gain additional context and answer any outstanding questions.
Auditors interview workers that represent each contract type and gender. This often includes year-round full-time and part-time workers, temporary and seasonal workers, piece-rate workers, migrant workers and workers under special contracts. It also includes informal workers that may not have written contracts, as well as workers that are hired through third-parties. When unions and/or worker committees are present, the representatives are also consulted and interviewed. Worker and worker representative interviews are essential for proper verification and risk management.
It is important for auditors to physically check that in-kind benefits meet specific quality requirement and are regularly available. Observation is also helpful for confirming the size of the facility, size of the workforce and job types at a facility.
Living wage projects, led by diverse groups of partners and stakeholders, are taking place all over the world. As focus on this important topic has continued to grow, so too has the need for uniformity around how living wage gaps are calculated and verified. Consistent and aligned living wage gap analysis and verification is crucial to the effectiveness and credibility of strategies to close gaps and achieve decent standards of living for workers.
For buyers or traders that have operations and supply chain partners all around the globe, this alignment is fundamental to building trust and the capacity to scale up. For businesses that are calculating the living wage gap among their own employees – be they at production level or further up the supply chain – uniformity will ensure clarity and reduce inefficiencies.
Unverified Salary Matrices serve as a self-assessment exercise. Ultimately, the desired scenario is that the Salary Matrices can be verified through audits by certification schemes that have living wage requirements in their standards. Currently, several programs are strengthening their certification standards and auditing procedures to include living wage related requirements. IDH recommends certification schemes and trained auditing bodies that can verify Salary Matrix data according to the agreed upon guidelines.
Salary Matrix Audits are performed on-site and involve a four-step process: 1. Documentation review; 2. Management interviews; 3. Worker and worker representative interviews; and 4. First-hand observations.
Pre-audit data checks, on the other hand, involve a process of reviewing Salary Matrix data and interviewing facility managers to help ensure that the data is complete and has been entered according to the Salary Matrix guidance. Reviewers will recommend adjustments to Salary Matrix data if warranted. Data validation is a useful step for preparing facilities ahead of audits, or to inform projects aimed at closing living wage gaps before the Salary Matrix has been verified. However, data checks are not audits and cannot verify the accuracy of living wage gaps.
Interest in the training? Please contact IDH’s auditor training partner, Impact Buying Academy, at: www.impactbuying.com/academy
IDH strongly recommends working with sustainability schemes that have included living wages in their standards and auditing organizations that verify compliance to those standards. In the absence of sustainability scheme, IDH recommends auditing organizations that have been trained to verify wage data entered into the Salary Matrix, and the living wage gap calculations, as a stand-alone process. In some cases, independent trade unions and worker committees may also be able to verify living wage gaps.
IDH recommends selecting schemes and/or auditing organizations that:
- Adhere to IDH Guidelines for Auditing Living Wage Gaps and deliver the associated base report for certificate holders.
- Verify living wage gaps against benchmarks developed by methodologies recognized through the Roadmap on Living Wages’ recognition process.
- Utilize the Salary Matrix (or equivalent tool) to calculated living wage gaps across all operations, which is then verified.
- Have trained auditors on the use of the Salary Matrix and the Guidelines for Auditing Living Wage Gaps.
You can find the list of trained auditors at Impact Buying Academy.
Important disclaimer: IDH is not responsible for the work that these sustainability schemes and auditing organizations perform. These organizations have their own quality control and assurance programs and any complaint about their work needs to be brought up to them directly.
The purpose of the audit is to verify the accuracy and validity of the data that users have entered into the Salary Matrix tool so as to arrive at a specific living wage gap calculation for their employees during the relevant year. The outcome of the process is a decision by the auditor on whether the information has been verified as ‘positive’ or negative. A ‘positive’ verification means that the living wage gap calculation is accurately represented, and that the data to arrive at the gap calculation has been confirmed with employees representing different contract types and genders which are relevant for jobs at that facility. A ‘negative’ verification means that at least one data point is inaccurate, which has led to the miscalculation of living wage gap and/or that the employees have not agreed with the data entered.
Salary Matrix Data Check Companies
Dr. Lippert – Contact: firstname.lastname@example.org
Flocert – Contact: email@example.com
Preferred by Nature – Contact: firstname.lastname@example.org
Qima – Contact: email@example.com
Sipas – Contact: firstname.lastname@example.org
Heartwood LLC – Contact: email@example.com
Fair & Sustainable Consulting – Contact: firstname.lastname@example.org