Collaborative wage solutions elevate livelihood of workers in the tea sector
Streamlined buyer contributions enable transparent living wage payments
The Collection & Distribution (C&D) mechanism in the tea sector began as a pilot in 2024 and due to its positive impact, expanded into its second year of implementation in 2025. Producers reported improved social dialogue, strengthened trust between workers and management, enhanced worker morale, and productivity. These early gains have set the stage for a more ambitious effort in 2025.
In 2025, three producers - Sasini Plc and Nandi Tea in Kenya, and Bogawantalawa in Sri Lanka- partnered with four buyers including Taylors of Harrogate, LIPTON Teas and Infusions, Ahmad tea and Superunie. Each buyer agreed to work on living wages by closing a portion of the living wage gaps proportional to their buying volumes. After measuring the gaps, workers who were earning below living wages received additional payments, leading to improvements in their standard of living.
The tea sector continues to face persistent challenges, including low margins, rising production costs, and global market pressures, as supply is increasing faster than demand, creating persistent oversupply. In key tea-producing countries such as Kenya and Sri Lanka, wages have long remained below living wage estimates, as pay levels fail to keep pace with the rising cost of living.
In 2024, tea companies from Europe and the United Kingdom aimed to create a mechanism to address a significant gap in wages that exists across tea-producing countries. In response, IDH brought together buyers and producers in the tea sector to reflect on how businesses can remain profitable and at the same time living wages can be achieved ensuring that value reaches the workers in the tea sector. From this collaboration emerged the Collection and Distribution (C&D) mechanism, a structured system designed to collect additional financial contributions from buyers and distribute them directly to the workers. The initiative creates a reliable structure for mobilizing funds and distributing them to workers, ensuring meaningful progress towards living wages.
Subsequently, in 2025, both buyers and producers continued this approach: Sasini Plc and Nandi Tea in Kenya, and Bogawantalawa in Sri Lanka partnered with four buyers including Taylors of Harrogate, LIPTON Teas and Infusions, Ahmad tea and Superunie. Each buyer agreed to work on living wages by closing between 50% and 100% of the living wage gaps, proportional to their buying volumes. The amount that each buyer purchases from the participating producers ranges from 2.5% to 25.4% of the production volumes. Together as a group, they agreed to follow a uniform measuring approach using the salary matrix as well as a process for collecting and distributing voluntary contributions.
Putting living wages into action to ensure more renumaration for tea workers
To measure living wage gaps in a uniform manner, the Salary Matrix was used across the three producer locations in the two countries. This tool enabled both producers and buyers to calculate the living wage gap and identify the number of workers earning below living wages. Each producer completed the Salary Matrix using their own detailed payroll information, ensuring that the calculated gaps accurately reflect current wage data for all 16,053 workers.
The Salary Matrix then generates data on the number of workers who are earning below living wages and the living wage gap size within each company. Across both countries, 99.2% of workers were earning below the living wage, and the average living wage gap size was 37.6%. From the Salary Matrix results, the tool also computes the living wage gap represented by a cost per unit (kg) of tea. Although the amounts vary between producers, the gap per kilo of tea was between 0.12USD and 0.56 USD. This information is then shared with each buyer, enabling them to understand the total level of financial contribution required to close the gaps for the volumes they purchase. This transparency allows buyers to make trusted and informed contributions towards ensuring tea workers earn better remuneration and ultimately improved livelihoods.
Closing living wage gaps through cash bonuses
The next step entails buyers transferring funds required to close the gap proportional to the volumes they source from a given producer. The total living wage contribution received by the three producers in 2025 from participating buyers is expected to be about 870, 946 USD once all the funds have been transferred. In total, 6545 workers received a living wage contribution during 2025 excluding an additional distribution scheduled for June 2026, which is expected to increase this number further.
After calculating the differential, a structured worker consultation process is conducted to ensure transparency and worker ownership of how the money will be transferred. This process provides workers with an opportunity to raise any concerns and confirm their agreement to receive additional payment. Across the participating producers, the consultation processes were conducted through established worker representation structures. At Nandi Tea, consultations were facilitated by both the trade unions and workers’ committees, who played a role in sharing feedback on the mechanism. Sasini Plc organised worker consultation meetings and assemblies, creating an inclusive environment for workers to understand the mechanism and share their perspectives. Bogawantalawa similarly utilised its workers’ committee and trade union structures to guide discussions and gather worker input.
The involvement of workers’ committees proved valuable as it provided an opportunity to socialise the collection and distribution mechanism, ensuring that all workers understood how the cash bonus would be allocated. They also helped gather input and address any concerns about implementation. Feedback received during the pilot consultation process, such as the need to involve contracted workers, was solved in the subsequent worker consultation process. Through these consultation processes, workers’ voices were incorporated, leading to a clear consensus on cash‑based payout.
Buyers and producers agreed to transfer the contributions as ring-fenced funds, as it provided robust assurance that the financial contributions would reach the workers. Buyers transferred the funds directly into the producers’ bank accounts. Once the producers receive these funds in their bank account, they are responsible for ensuring that workers understand the source of the cash bonus payments. They then distributed cash bonuses to workers based on the worker allocation model.
Across all participating producers, cash bonus allocations were impact-driven: workers with larger living wage gaps received proportionally higher contributions. In both Kenya and Sri Lanka, disbursement was made only to workers present at the time of the payout to promote fairness, accuracy, and transparency in the distribution process.
After the disbursement of funds is completed, the data undergoes verification by Flocert auditors. This process includes auditing the Salary Matrix and cash bonuses distributed to workers. This verification ensures that the payments reach the correct beneficiaries, specifically, the workers employed on the tea plantations at the time of payout—and reinforces the integrity and accountability of the overall mechanism.
Our participation in the C&D mechanism reflects a strong commitment to fair compensation and employee well-being. Through the implementation of the living wage, we have addressed income gaps in a transparent and data-driven manner, resulting in improved livelihoods and motivation among employees. This has led to enhanced productivity, strengthened employee loyalty, and contributed to greater operational stability. We view this initiative as a critical step toward building a sustainable business.
Understanding the living wage gap in our supply chain has been an essential first step to working out how to close that gap. This pilot provided an initial mechanism for calculation and distribution which we were able to build on and incorporate into our own sourcing standard, under our Hand Picked Profit Shared bonus. Our work with IDH provides a much needed benchmark to understand how our bonus is closing the living wage gap and what more we can do to strengthen these voluntary contributions.
We chose to support the C&D mechanism for another year because it offers a data-driven, practical approach to share more financial value with tea workers while also elevating the issue of low wages in tea. The real strength of the work is that it involves multiple companies working towards the same goal. The C&D process has given us a solid foundation to build on, and we will continue to invest in initiatives that ultimately lead to better remuneration for workers across the tea sector.
We consider living wage an important part of building a more sustainable future for our industry. The pioneering work we did with IDH, peers and producers, allows us to better understand the challenges and opportunities, and to take meaningful steps towards living wages for those who make our teas possible.
At Superunie, we chose to participate in the Collection & Distribution (C&D) mechanism because it provides a practical and transparent way to help close the living wage gap in the tea sector. The C&D mechanism brings value through its structured and data-driven approach, particularly by using tools like the Salary Matrix to create more clarity and alignment on existing wage gaps. For Superunie, continued involvement reflects our commitment to contributing to a more sustainable tea sector.
Learnings or challenges
While the mechanism delivered benefits, it also presented challenges. Currency fluctuations and exchange rates affected the final value of contributions received by workers. To address this challenge, the funds were converted into local currency at the prevailing exchange rate and after which payments to workers were made in local currency. Transferring payments into individual worker bank accounts increased administrative complexity and costs for producers. Some producers employ a lot of subcontracted labour, and it is very difficult to trace these employees back for payout. To solve this problem, the solution is to review the data registration processes with the subcontractors.
Despite these hurdles, the mechanism generated some positive outcomes. Producers reported increased productivity and boosted workers' motivation, driven by the additional cash payments, which played an important role in improving the livelihood of tea workers in both Kenya and Sri Lanka. Workers used the bonuses to cover essential payments such as school fees and school supplies, buy livestock, farm inputs, motorbikes, furniture, phones, and essential household items such as groceries.
To overcome these challenges, continuous engagement between producers and workers played an essential role and supported smooth and accurate disbursement of funds. Looking ahead, clearly defining each stakeholder’s role upfront will be critical to avoiding delays and ensuring smooth implementation throughout the process.
Next steps
Looking ahead, producers hope that the initiative will be scaled up given the positive benefits already observed for tea sector workers. On the other hand, buyers that want to continue this ambition are currently under discussion on how these services will continue under the umbrella of IDH solutions.
Role of IDH in the C&D mechanism
IDH serves as the knowledge partner for the Collection & Distribution (C&D) mechanism, ensuring that voluntary contributions from buyers are effectively distributed as bonus payments to plantation workers. IDH does not directly handle funds but facilitates collaboration between buyers, producers, and other stakeholders to ensure transparency, accountability, and impact measurement. Through this work, IDH focuses on practical, scalable progress to improve worker livelihoods while addressing systemic wage challenges in the tea sector. From 2026 onward, IDH Solutions will take over the management of the Salary Matrix and the voluntary calculation tool.
Overview of Sasini
Sasini PLC is one of the Kenya’s primary food and beverage producers which was established in 1952. It is a public limited liability company listed on the Nairobi Securities Exchange, with diversified operations in tea, coffee, macadamia, and avocado production. The company is recognized for its integrated value chain, encompassing the growing, processing, and marketing of agricultural products for international markets. Sasini PLC remains committed to sustainable agriculture, responsible business practices, and the continuous improvement of its environmental, social, and governance (ESG) performance.
Kipkebe Limited, a subsidiary of Sasini PLC, is a tea producer in Kenya engaged in the growing, processing, warehousing, and marketing of high-quality black tea. The company operates four tea estates; Kipkebe, Magura, Kiptenden, and Keritor located in the highlands west of the Rift Valley. Its operations are supported by a well-integrated value chain that combines estate production with smallholder out-grower sourcing.
Kipkebe Limited markets its tea through the Mombasa Tea Auction as well as through direct export channels, ensuring a strong presence in global markets. The majority of its tea is exported to key destinations, including the United Kingdom, Europe, North America, the Middle East, and other markets across Africa.
Overview of Nandi Tea
Nandi tea is located in Nandi County in Kenya. The company was incorporated in 1947 and produces, processes, and markets high-quality tea for both local consumption and global export markets. Beyond standard production, Nandi tea team works to support environmental conservation, social responsibility, and sustainable agricultural practices that contribute to producing tea that meets the standards of the tea sourcing partners.
Overview of Bogawantalawa
Located in Sri Lanka, Bogawantalawa Tea Estates PLC is a Sri Lankan agribusiness engaged in the cultivation, manufacture, and sale of tea, rubber, palm oil, and forestry products, with a strong global presence in tea exports. The company operates in the Golden Valley of Ceylon, producing premium black, green, herbal, organic, and flavored teas across 11 estates known for their rich terroir and high-quality output. Bogawantalawa has since been termed the Golden Valley of Ceylon Tea.
Overview of Taylors of Harrogate
Taylors of Harrogate is located in North Yorkshire, England. It is an independent, family-owned tea and coffee company founded in 1886. It supplies tea and coffee to consumers around the world. It is known for its commitment to trading in a fair and responsible way. Its sourcing approach emphasized ethical, long-term partnership with producers to ensure sustainable production.
Overview of LIPTON Tea and Infusions
LIPTON Teas and Infusions is the world’s largest tea business, with world -class brands that are household names such as Lipton, Pukka, TAZO, T2 and PG Tips. With production sites in 4 continents and a presence in more than 100 countries, LIPTON Teas and Infusions’ products are enjoyed by hundreds of millions of consumers around the world each day. As an independent company since July 2022, LIPTON Teas and Infusions is united in one purpose: creating value for all with every sip, from plant to cup.
Overview of Ahmad tea
Ahmad Tea is an independent family‑owned company founded in 1980 in Hampshire, England. The company is known for its blending craftsmanship, producing high quality black, green, flavoured, and herbal teas sourced from some of the finest tea gardens around the world. As a global brand, Ahmad Tea distributes its product to over 90 countries across six continents.
Their sourcing standard includes a profit share which rewards their key suppliers with a bonus to pass on to their tea workers for meeting quality standards and is part of Ahmad Tea’s shared responsibility for a sustainable supply chain (Hand Picked Profit Shared).
Ahmad Tea Hand Picked Profit Shared: We Can Bring Value Back to Tea
Overview of Superunie
Superunie is a Dutch purchasing cooperative founded in 1956. It represents a collective of supermarket chains that together supplies about 1,500 stores across the Netherlands. It leverages its collective buying power to negotiate favorable terms with suppliers. Superunie plays a role in the tea sector as a major purchaser and influence the tea products that reach the Dutch consumers through its supermarket network.