The Living Wage explained

Living Wage, National Living Wage, Minimum Wage. All very important terms, however they can get confused.

As we draw closer to the implementation of the National Living Wage on 1st April 2016, it is important to understand what these terms mean and how they affect employers and employees.

The National Minimum Wage

It is compulsory for all employers to pay the National Minimum Wage. The hourly pay for those over 21 is currently £6.70 and is announced every October.

It is calculated by the Low Pay Commission by taking into account stakeholder (employee and union) views and average weekly earnings. However they do not make detailed calculations of the cost of living.

If you would like more information about the National Minimum Wage please click here.

The National Living Wage

On 1st April 2016 the Government’s National Living Wage will come into effect, replacing the National Minimum Wage. Hourly pay will increase to £7.20 for those over the age of 25 and who are not in their first year of an apprenticeship. Similarly to the National Minimum Wage, the National Living Wage is a legal requirement.

The National Living Wage is calculated by looking at the median wage across the country and estimating what the market can bare to pay. In addition to this the UK government plan to increase the hourly wage each year with the aim of reaching 60% of the median wage across the country by 2020.

If you would like more information on The National Living Wage, and to make sure your business is ready for the 1st April, please click here.

The Living Wage

The Living Wage is a voluntary hourly rate set independently and updated annually to ensure that people are able to live a decent life, rather than just survive.

Although both the National Minimum Wage and National Living Wage intends to ensure that employees are being paid a fair amount, the Living Wage differs in a few ways –

  • It is voluntary
  • It is calculated according to the basic cost of living in the UK and London (there are two rates)
  • It applies to all employees over the age of 18

The Living Wage Foundation launched a Living Wage campaign in 2001 and they provide advice, support, and accreditation to employers implementing the Living Wage. The Living Wage is currently set at £8.25 for the UK and £9.40 for London per hour.

The Living Wage – Brighton and Hove

Brighton and Hove started a Living Wage campaign in April 2012 to promote the business benefits of paying the Living Wage locally. The business-led campaign (managed by Brighton Chamber) aims to make Brighton & Hove a great example of how the Living Wage can become the normal and accepted minimum level of payment for all employers in the city.

Businesses can sign up to the local campaign for free to show their commitment. The business will have a profile on the website and be included in positive promotion around the campaign.

Over 260 businesses are signed up to the Brighton & Hove Living Wage Campaign. If you would like to find out more about the campaign or show your commitment towards the Living Wage please visit the website.

Still confused? Get in touch for a chat:

01273 719097

Thanks to Brighton University student Ella Perriton for writing this blog for us.