Minimum and National Living Wage Increase

Great news for all working professionals in UK – the government has agreed to increase the National Minimum Living Wage from the 1st of April, 2018.

This increase is a culmination of the reforms suggested in the November Budget statement and aims to help all workers aged 25 years and above.

While employees in the UK are excited by this proposition, there are some who find the increase insufficient. These people argue that the wage increase is still well below the real Living Wage, which is a voluntary scheme to which thousands of retailers, employers, charities, and local authorities have signed up.

Let us take a closer look at the National Minimum Living Wage increase and its various aspects.

What is the National Living Wage and when is the 2018 increase happening?

The National Living Wage is the total amount of money all working professionals aged 25 years and over are entitled to by law.

The first National Minimum Wage was proposed by the Labour government in 1998. Before that, there was no existence of an official rate although trade unions battled hard for such a reform. Likewise, the previously-known National Minimum Wage was made renamed as the compulsory National Living Wage in 2016.

Thereafter, according to the latest update, National Living Wage will increase for those aged 25 years and over, from £7.50 to £7.83. This 33 pence-an-hour raise will be effective from next Sunday April 1st, 2018.

As per the Low Pay Commission (the government body that implements the rates), this increase will be the largest in over a decade, especially for workers aged between 18 and 20 years (a rise of 4.7 percent), and between 21 to 24 years (a rise of 5.4 percent.)

What is the National Minimum Wage?

Unlike the National Living Wage, the National Minimum Wage is the total amount of money all workers aged under 25 years (but over the school-leaving age) are entitled to by law. However, this amount differs according to the age of the worker and whether the worker is working on an apprenticeship scheme.

According to the proposed reform, workers from different age groups will receive increased wages as per the following rates:

  • Minimum Wage (for workers aged between 21-24 years) will increase from £7.05 per hour to £7.38 per hour
  • Minimum Wage (for workers aged between 18-20 years) will increase from £5.60 per hour to £5.90 per hour
  • Minimum Wage (for workers aged between 16-17 years) will increase from £4.05 per hour to £4.20 per hour

These national limits are legally binding. If anyone believes that they are not getting the National Minimum Wage or National Living Wage should complain about this to their employers by way of raising a grievance.

If this does not work, you can either go to HMRC (Her Majesty’s Revenue and Customs) or file an employment tribunal claim. For all information on your rights and legal wage entitlements, you can consult a reputable employment lawyer.

Which workers do not qualify for either the National Living Wage or National Minimum Wage?

As per law, those individuals who are self-employed, company directors, members of the armed forces, voluntary workers and people who are living in the family house of their employer and doing household chores, do not qualify for either rate.

All other workers including home workers, pieceworkers, agency workers, part-time workers, commission workers, and casual workers must receive at least the National Living Wage or the National Minimum Wage.

Likewise, there is no  pay difference between those living in London and elsewhere. The only discrepancy in pay is for individuals working in horticulture or agriculture.

In addition, workers who have already accepted their contract of employment before 1st October 2013, will receive wages according to it. Otherwise, all workers are entitled to receive the National Living Wage or National Minimum Wage, depending on their age and if they are working under an apprenticeship.

What is the difference between the National Living Wage and National Minimum Wage?

While National Minimum Wage is the minimum amount of money that workers in the UK are legally entitled to be paid per hour, the National Living Wage is the legally entitled amount per hour payable to workers aged 25 years and above.

All workers and apprentices below the age of 25 years, however, are entitled to the Minimum Wage.

According to sources, the government has set aim to raise the National Living Wage to £9.00 an hour by 2020. To achieve that, the government will increase the National Living Wage each April until the £9.00 wage target is reached.

Subsequently, the current National Living Wage will increase to £8.05 in April 2018, then to £8.50 per hour in 2019, eventually reaching the £9.00 target wage in 2020.

What is the real Living Wage?

This voluntary wage scheme recognises the actual cost of living. 3,000 employers have already signed up for this scheme till date. Under it, the lowest pay rate calculation is done according to the cost of living in the UK and is based on the changing cost of a basket of groceries.

This amount is calculated and set every November by the Living Wage Foundation charity along with several accredited employers including NHS trusts, local authorities, banks, charities, retailers, and construction companies.

According to the foundation’s calculations, the real Living Wage is £8.75 an hour ( £10.20 for workers living in London.) While companies have no legal entitlement to pay more than the National Minimum and Living Wages, those which have agreed to the real Living Wage scheme have to pay all workers according to those rates.

Wrapping Up

Employment law in the UK gives each citizen a right to equitable work opportunities and wages. Both National Living Wage and Minimum Wage aim to help achieve that goal.

With these two acts safeguarding the rights of workers, uniformly throughout the country, there is no reason why anyone would complain of unjust wage distribution.

Even if such a thing happens to an individual, he or she can seek advice from a reputable employment lawyer and take appropriate legal action.