A. It’s likely that your client has seen the news about the increase in the voluntary living wage. This wage is not to be confused with the National Living Wage introduced by the government in April 2016.
The Living Wage is a voluntary scheme ran by the Living Wage Foundation. The scheme encourages employers to review and set minimum hourly rates based on the “real cost of living”, rather than the rates set by the government, and has different pay rates for those working in London and those working elsewhere in the UK. The voluntary Living Wage rate applies to workers over 18 and is increased yearly on Monday of the first week in November. From November 2016, the voluntary Living Wage for the UK increased by 20p to £8.45 per hour and also increased by 35p in London to £9.75 per hour. This is a pay increase of 3.7% across the UK.
The voluntary Living Wage only applies to your clients if they have signed up to the scheme. There are almost 3,000 employers across the UK who have committed to be Living Wage employers, with over 1,000 paying the London Living Wage. As the scheme is voluntary, if any clients are signed up then they have six months from the date of the increase to raise wages to the new rate, with workers receiving the increased hourly rate by the following May. Your clients can choose to sign up to the scheme in the future so long as they meet the rules of accreditation; it is believed that paying staff higher pay rates helps to improve productivity and reduce turnover of staff.
The National Living Wage, the compulsory pay rate set by the government, remained at £7.20 per hour in October whilst National Minimum Wage rates increased. These rates are a legal requirement and your clients need to ensure they are paying these to all workers based on their age and job status. From April 2017, these two rates will align and will be reviewed, and potentially increased, each April from then on. This will, hopefully, remove any future confusion between the National and voluntary Living Wage.
