Paying the real Living Wage

The start of April saw the implementation of the new statutory rates for the 2025/2026 year. Everything from minimum wage rates to statutory sick pay and maternity pay increased. Whilst these rates are compulsory and must be paid by employers, there is another voluntary rate that needs to increase by 1st May 2025 - the real Living Wage.

What is the real Living Wage?

The real Living Wage is a voluntary initiative that employers can choose to join, which seeks to improve the pay of those in typically low-paid sectors. When setting its rates, it focuses on the needs of the employee, rather than the employer, and tries to reflect the actual cost of living. Unlike the National Minimum Wage, there are separate rates for London and the rest of the UK. Whilst there is no legal obligation pay the real Living Wage; employers who choose to do so can receive accreditation from the Living Wage Foundation.

There are currently over 15,000 accredited employers in the UK including household names such as Nationwide, IKEA and Google.

The current rates

On 23rd October 2024, the new rates were announced, and employers wishing to maintain or gain an accreditation have until 1st May 2025 to implement them. The rates apply to all workers aged 18 and over and are:

·       £12.60 per hour for the UK

·       £13.85 per hour in London

Benefits of paying the real Living Wage?

Being a real Living Wage accredited employer doesn’t just give you a logo to use, it can also provide benefits in the way of reputation and retention rates. In fact, the Living Wage foundation claim that 87% of accredited businesses said their reputation improved and 60% said it increased their employee retention rates. It also goes without saying, that in the current economic climate, paying more is not only likely to see happier and more engaged staff, but allow employers to attract better talent to their business.

What’s the downside?

Well, obviously cost is the big challenge. Any employer wanting to be a real Living Wage accredited business needs to carefully assess whether this is a rate they can afford and sustain. If they cannot continue to pay the real Living Wage long-term, remembering that it increases each year, then they not only risk losing their accreditation, but also damage to their reputation both internally and externally.

Ultimately, as a voluntary rate, it is down to the employer to weigh up the pros and cons of what becoming a real Living Wage accredited employer will mean for their business. Remember, if you are already, or looking to become accredited, then you must implement the new real Living Wage rate by 1st May 2025.

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