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News added on 05.11.2018

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Living wage

Living Wage Foundation announces annual increases to real Living Wage

The Living Wage Foundation has announced that its UK Living Wage has risen from £8.75 to £9.00 per hour and its London Living Wage has risen from £10.20 to £10.55 per hour. How is this different to the national living wage?

The Living Wage, sometimes called the real Living Wage, is entirely separate from the government’s compulsory national living wage (NLW) and national minimum wage (NMW). The NLW is currently £7.83 per hour, rising to £8.21 per hour from 1 April 2019, and all employers must pay it to workers who are aged 25 and over. Various mandatory NMW rates also apply to those workers who are aged 16 and over but under 25.

Conversely, the real Living Wage is an hourly rate which is calculated independently according to the real cost of living in the UK and London, based on a basket of household goods and services, and it’s updated annually, with the new rates being announced on the Monday of the first week of November each year. There are two rates, one for London, which covers all the boroughs in Greater London, and one for the rest of the UK. The rates are calculated by the Resolution Foundation and overseen by the Living Wage Commission (which in turn is appointed by the Living Wage Foundation), based on the best available evidence about living standards in London and the UK. It’s entirely voluntary. The real Living Wage rates are higher than the NLW and NMW rates because they’re calculated based on what workers need to get by, not just the government minimum.

The new real Living Wage rates are £10.55 per hour in London (an increase of 35p) and £9.00 per hour across the rest of the UK (an increase of 25p). Over 180,000 UK workers are set to receive a pay rise as a result. The 2018 increases have been largely driven by higher transport costs, private rents and council tax feeding through to the basket of goods and services that underpin the rates. The rates apply to workers aged 18 and over, and there are no reduced rates for those under the age of 18.

Accredited Living Wage employers are required to implement these rises as soon as possible and within six months of the announcement. This means that all affected workers should receive the new rates by 1 May 2019. Only guaranteed non-deferred payments can be included in the real Living wage rates, so this would exclude pension payments, non-guaranteed bonuses, sales-related commission, etc.

The total number of accredited Living Wage employers currently stands at over 4,700 nationally, of which more than 1,500 are in London. These range from large FTSE 100 companies to small businesses. The accreditation is a signed licence between the Living Wage Foundation and the employer.

The real Living Wage is a voluntary hourly pay rate which is calculated independently according to the real cost of living in London and the rest of the UK. You’re not obliged to pay it, but if you do wish to do so, you can apply to the Living Wage Foundation for accreditation as a Living Wage employer. Accredited Living Wage employers must now implement the latest rises within six months (£10.55 per hour in London, £9.00 per hour elsewhere).

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