The UK National Living Wage was officially increased as of April 1st, 2018. The increase has seen many UK workers earn a long-awaited pay boost. The increase was confirmed in the November budget by Philip Hammond. The boost is however reserved for UK workers aged 25 years and above. It is also below the current Real Living Wage, a wage that is independently calculated by the Living Wage Foundation, a voluntary scheme with thousands of employers involved (such as local authorities, retailers, and charities).
Definition: National Living Wage
The UK National Living Wage (formally referred to as National Minimum wage before 2016) refers to the amount of money any UK employee aged 25 years and above is legally entitled to earn. The wage has increased to £7.83 (from £7.50). The £0.33 per-hour increase was officially introduced on 1st April 2018.
The United Kingdom introduced a compulsory national living wage back in 2016. The Labour government set the first ever National Minimum Wage in 1998. Before that, there was no official wage rate in existence although trade unions in the UK have always fought hard for the rights of their workers.
Mr. Hammond wants to raise the National Living Wage consistently to £9 in the next two years (by 2020). The news has been welcomed by many UK workers although only workers with employers who are Real Living Wage scheme members stand to enjoy.
Definition: National minimum wage
The UK National Minimum Wage refers to the amount of money workers aged between school-leaving age and 24 years are entitled to. The amount can vary depending on factors such as age and whether a worker is a member of an apprenticeship scheme.
As of April 1, 2018, workers aged 21 to 24 years will earn a minimum of £7.38, up from £7.05. Workers aged 18 to 20 years will earn a minimum of £5.90, up from £5.60. Workers aged less than 18 years will earn £4.20, up from £4.05.
Apprentices who were entitled to £3.50 (if they are less than 19 years old) are now entitled to £3.70 as of 1st April 2018.
The proposed national wage limits are binding. Any UK worker who hasn’t been getting wages matching the new national limits has the right to complain to their employer immediately. If the employer fails to address the concern, the worker can escalate the complaint to the HMRC for further investigation and action.
Who doesn’t qualify for the National Living Wage or National Minimum Wage?
The new National Living Wage and National Minimum Wage limits aren’t applicable to voluntary workers, self-employed individuals, company directors as well as family members living in an employer’s home or those who do household chores.
Discrepancies by location and industry
It’s also important to note that the pay is the same regardless of location. The pay is the same for workers living everywhere including London. There are however differences in pay for workers in horticulture and agriculture.
All UK workers who were employed before 1st October 2013 are entitled to the wage set in their employment contracts. Entitlement to the National Minimum Wage or National Living Wage depends on a worker’s age as well as their membership to an apprenticeship scheme.
Definition: Real Living Wage
The Real Living Wage is a wage independently calculated yearly by Charity organisation, Living Wage Foundation. The wage aims to acknowledge the “real” or “actual” cost of living based on factors like fluctuating prices of groceries in the UK. The scheme has 3000 employers as members. The wage limit is set by Living Wage Foundation. Accredited employers include; construction companies, retailers, banks, NHS trusts, local authorities, and charities.
According to Living Wage Foundation, the Real Living Wage is £8.75 per hour everywhere except London. London’s Real Living Wage is £10.20 currently. The Real Living Wage is calculated yearly (every November). All accredited employers must commit to any increases. The rate applies to workers over 18 years of age in recognition that such workers have to face similar living expenses like everyone else.
Although companies aren’t legally entitled to pay their workers in line with national living or minimum wages, companies which are members of the Real Living Wage scheme automatically pledge to pay their workers as per the current Real Living Wage rates at any given time.