As a business, you’re committed to providing the National Living Wage to all employees over 25, but many employers are finding that signing up to the Living Wage scheme has far-reaching benefits for their company. This year the Living Wage rates have been increased across the country, so here we’re going to highlight the differences between the Living Wage and National Living Wage.

The Living Wage is a voluntary scheme set in place by the Living Wage Foundation, with the aim to:

  • Set minimum hourly rates based on the ‘real cost of living’
  • Adjust the rate for those working in London compared to those working elsewhere in the UK
  • Generally set rates higher than those set by the government
  • Apply the rates to all workers aged over 18

Employers have the choice to sign up to the voluntary scheme and meet the rules of accreditation, after which they’re committed to being Living Wage employers. Current statistics show that there are:

  • Almost 3,000 Living Wage employers across the UK
  • Over 1,000 paying the London Living Wage

It’s believed that paying employees the higher Living Wage rates helps to improve productivity and reduce staff turnover.

What rate did the Living Wage increase to?

The voluntary Living Wage increases every year from the first Monday in November. From November 2016 the rates are:

  • The UK Living Wage = £8.45 per hour – an increase of 20p per hour
  • The London Living Wage = £9.75 per hour – an increase of 35p per hour

As the scheme is voluntary, employers have six months from this increase to implement the new rate in their business, which means that workers should receive the new rate by the following May.

How is the National Living Wage different?

Introduced in April 2016, The National Living Wage is:

  • A statutory minimum pay rate for those aged 25 and over
  • The rate that employers are legally required to give eligible workers
  • Set at £7.20 per hour

It also differs from the Living Wage in other key ways:

  • If employers fail to provide this rate they can face significant costs to repay the underpayment and potentially face a fine
  • The National Living Wage will be reviewed each year and will potentially increase each April
  • Any increase in National Living Wage must be passed on to workers in their next pay reference period, which begins on or after the date of the increase