The government has agreed from April 2017 The National Living Wage is set to change… or was it the National Minimum Wage? Many people seem to be confused between the two types, so here at Selective Group recruitment we have provided an explanation.
What’s the difference between the two anyway?
UK Employers and staff have found themselves confused in regards to the terms surrounding The Living Wage, National Living Wage and the National Minimum Wage. So we wanted to provide some clarification to you all.
The National Minimum Wage
The National Minimum Wage is exactly what is say and sounds. It is the minimum amount of pay per hour UK; workers are entitled to receive by law and are currently reviewed yearly by the government. The rate for each age group within the UK is different and has been regulated by the Low Pay Commission since 1999.
Of course, UK workers need to be of school leaving age, which is currently (16) to receive the benefits of the National Minimum Wage. In 2016, those aged 18 and under were entitled to £4 per hour, 18 to 20-year-olds were allowed £5.55, 21 to 24-year-olds got £6.95 an hour and those over 25 received £7.20 of hourly wages.
This rate changes every October and for those under the age of 25, the minimum wage will change accordingly this year.
| YEAR | 25 AND OVER | 21 TO 24 | 18 TO 20 | UNDER 18 | APPRENTICE |
| 2017 | £7.50 | £7.05 | £5.60 | £4.05 | 3.50 |
The National Living Wage
This is the one where people can get confused, as there is a difference. Despite using the term Living Wage, the National Living Wage has nothing to do with it (further explained below). It’s basically a new minimum wage rate – the National Minimum Wage rebranded. It is exactly the same thing but now with a new name.
Launched under the former chancellor George Osborne in 2015, it represents the government’s aim of raising the wages of those aged 25 and older to £9 an hour by 2020.
The first increase in pay is set to take place in April 2017, whereby the current rate of £7.20 will increase to £7.50 an hour. From 2018 you’ll need to pay staff £8.05, followed by a £8.50 hourly rate in 2019. As a result of this, some one million workers will directly receive a pay rise.
The Living Wage
The Living Wage shouldn’t be confused with the government’s National Living Wage – one difference being that it isn’t enforceable by law. Companies can voluntarily adopt it, but know that it means paying a higher sum of money to staff.
Here’s why. Promoted by the Living Wage Foundation and calculated annually by the Resolution Foundation, it’s a benchmark and recommendation of what it will take now – not years down the line – to improve living standards. TUC general secretary Frances O’Grady explained: “Unlike the government’s NLW, the real Living Wage is based on a review of the evidence on what is currently happening to people.”
The Living Wage rate currently stands at £8.45 an hour, with the London Living Wage separately calculated as being £9.75 per hour. And while the Living Wage Foundation welcomed the government’s NLW, it claimed the lowest level of pay currently estimated for a comfortable London life was already higher than what the NLW will be in 2020.
