Have you heard of the Living Wage?


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Legal, Resources

The only legislation that currently exists in the UK regarding pay is that National Minimum Wage legislation which says that:

The minimum wage is a legal right that covers almost all workers above compulsory school leaving age. There are different minimum wage rates for different age groups of workers as follows:

 

  • The main rate for workers aged 21 and over from 1 October 2012 is £6.19.
  • The development rate for 18-20 year olds is £4.98 per hour (this has not increased since October 2011).
  • Apprentices under 19 or in their first 12 months of apprenticeship must be paid a minimum of £2.65 from 1st October 2012. See our Guide to Apprenticeships here.

However, there is an increasing call for workers to be paid a ‘Living Wage’.

The Living Wage

The concept of a living wage – as opposed to a minimum wage which often bears no resemblance to how much it costs to live where you work – was taken up around a decade ago. It is currently a voluntary pay rate that employers can pay their staff, and it is set at £8.55 per hour in London and £7.45 outside London (rising to £8.80 and £7.65 in November 2013).

There is a Living Wage Campaign that calls for every worker in the UK to earn enough to provide their family with the essentials of life. Various research has been conducted that finds that a higher wage improves staff motivation and performance, reduces absence and leaver rates. As always, it is workers in the catering/hospitality, cleaning, retail, security and care industry that tend to be paid the least.

In November 2012, Opposition Leader Ed Miiband unveiled proposals, during Living Wage Week, to give workers a ‘living wage’ of at least £7.45 if Labour wins the next election. Currently it is believed that one worker in five is paid below the living wage.

Since the London living wage was introduced in 2005, an estimated 11,500 workers have benefited. The wage is not binding on any firm but up to 200 employers back the scheme. Five of 32 London boroughs have signed up, but County Hall and another five councils are awaiting accreditation. The London Living Wage is calculated by the Greater London Authority.

In November 2012 the London Mayor Boris Johnson said:

“Paying the London Living Wage is the right thing to do – it can make all the difference for low income families. But it also makes sound business sense. There is increasing evidence that organisations that pay the Living Wage experience lower staff turnover and higher staff morale, health and productivity as well as being seen as good places to work and acquiring reputational benefits.”

A newly designed trademark that recognises and accredits employers who pay the London living wage was published in November.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

Photo by Mike Fleming