HR Expert: Real Living Wage foundation announces increase to the Real Living Wage
My client has contacted me in a bit of a state of panic. We had just been talking about the increases to the national living and minimum wage, and what it means for them. Now they have come and said their employees are arguing that what we agreed was wrong, and that actually their pay is going up to £9.90 an hour. Their staff in London say it is going to be £11.50! It sounds like things have got a bit confused, what can they do about it?

From April 2016, the top band of national minimum wage payments was ‘re-branded’ to be the ‘national living wage’, which since April 2021 has been paid to those aged 23 and over (previously this was for those over 25). This is not to be confused with the ‘real living wage’, which is a voluntary rate decided upon by the ‘Real Living Wage’ foundation, who base their calculations on the actual costs of living. The foundation sets two rates, one for London, and one for the rest of the UK, and it is usually more than the equivalent rates under the legally required national living and minimum wage. For comparison, below are a comparison of these figures:

Age 2021/2022 2022/2023
Workers aged 23 and over (NLW)* (from 1 April) £8.91 £9.50
Workers aged 21-22* (from 1 April) £8.36 £9.18
Development rate for workers aged 18-20 (from 1 April) £6.56 £6.83
Real living wage (18+) London

£10.85

implemented between 9 November 2020 and 9 May 2021

£11.05

implemented between and 15 November 20201 and 15 May 2022

Real living wage (18+) Across the Uk £9.50 implemented between 9 November 2020 and 9 May 2021 £9.90 implemented between and 15 November 20201 and 15 May 2022

 

As you can see, there is a significant difference. The other important thing to note is that the government set rate doesn’t change depending where the employee is, whereas the real living wage does recognise the increased costs of being in the English capital.

Your client is not wrong in keeping with the national living and minimum wage. The real living wage is a rate employers voluntarily commit to; currently around 9,000 have done so across the UK. Whilst it may be something they choose to look into and eventually pay their staff, they will still be meeting their statutory obligations if they did not choose to. Finding out more about how it is calculated, and how paying it can help employees to meet their basic needs can help your client make their decision about whether or not they want to make this commitment; any changes to pay rates are likely to be contractual, however, and such an important financial decision should only be made after assessing its affordability.

 


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