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The National Living Wage is the minimum government wage for employees over the age of 23. This is similar to the Minimum Wage in the UK, for employees under 23 years of age.
The UK Living Wage is based on the cost of living.
The Real Living Wage is a wage rate in the UK that businesses pay voluntarily to employees to help them with everyday expenses. There are more than 300,000 employees who benefit from the Living Wage and many employers are accredited with the Living Wage Foundation.
A higher Minimum Wage rate was introduced by the government in 2016 for all employees over the age of 25 that was inspired by this, and it’s often referred to as the National Living Wage.
The National Living Wage has recently increased by 10.1%, which is also the largest increase year-on-year so far. These new rates now represent almost £3,000 more than the living wage per year in the UK.
The National Living Wage is not based on what employees and their families need to live, but rather, it’s target-based, aiming to reach 66% of an employee’s median earnings by 2024.
Currently, this translates to an increase to £10.50 per hour by 2024. This year, the age was changed to include employees above 23 years of age.
The Real Living Wage is higher than the minimum wage because of the fact that it’s calculated according to what employees and their families need to get by.
However, employers who are able to do so, are encouraged to pay their employees a Real Living Wage to assist with the rise in the cost of living.
The National Living Wage for all employees over the age of 23 is £9.50 and the Real Living Wage is set at £10.90 in the UK and £11.95 in London. While the former is statutory, the latter is voluntary.
In comparison, the government minimum wage for under 23’s is currently £9.18.
For apprentices, the rates are slightly different. The apprentice rate is £4.81 under the National Minimum Wage and this applies to apprentices under 19 as well as those over 19 and doing their first apprenticeship year. This is why many of them usually look for loans in London.
Apprentices over the age of 19 who have already completed their first year of apprenticeship can get the full Minimum Wage for their age.
The National Living Wage and National Minimum Wage rates change every year on April 1. You can use a minimum wage calculator to determine whether you are currently getting the required minimum wage.
Employers can choose to become a Living Wage employer and get accredited by the Living Wage Foundation. They also have a searchable map so you can find employers near you who pay Living Wage. There are currently more than 11,000 accredited employers in the UK.
By becoming accredited with the Living Wage Foundation and paying a Real Living Wage to employees, businesses can benefit in many ways.
According to the Foundation, 86% of businesses say their reputations have improved since getting accredited. 75% of businesses say it has increased their motivation and retention rates for employees.
