Living Wage, National Living Wage, National Minimum Wage…confused yet?

Thursday February 2, 2017

Did you know that it’s Living Wage Week? The first week of November is recognised by the Living Wage Foundation as a UK-wide celebration of the Living Wage and of Living Wage Employers. The week will raise awareness of the benefits to employers, employees and wider society if employers add a little more cash to their employees’ wages at the end of each month. Instead of paying staff the National Minimum Wage (currently £6.70p/h for workers’ over 21), the foundation urges you to go further to ensure that the wage you pay your staff is enough to offer them a good standard of living
The Living Wage is not compulsory, and shouldn’t be confused with the National Living Wage that the Chancellor announced in the Summer Budget Statement back in July, which will be implemented from April next year.  The National Living Wage will apply to all employees aged 25 and over and will initially be set at £7.20 (but is intended that it will raise to £9 per hour by 2020). This has caused understandable confusion amongst the public and employers, but the principles and the rates of the two are very different.

Small businesses have raised concerns about the Chancellor’s National Living Wage, voicing that it is unaffordable. In many cases this may be true and will present big problems – particularly when the ripple effect up the pay chain is considered. But far from just benefitting employees and helping them to achieve a better quality of life, businesses have a lot to gain from paying their staff a little more in the long run. Evidence from the Living Wage Foundation shows improved staff performance, retention and reduced absenteeism for employers who pay the Living Wage.

So is it time to adopt the Living Wage for your staff?

Your brand is also worth considering in the argument for the Living Wage, as the way a business interacts with its staff can alter customer perceptions. You may have seen in the news the supermarket wage war recently. The grocery giants committed themselves to paying the Living Wage to stay ahead of the game and improve their image before it becomes compulsory. They were also finding that employees, like customers, were becoming savvier – shopping around if you will, for the best pay package. Adopting higher pay structures is a strategy to retain their best staff.

It was announced on Monday that the voluntary Living Wage will rise from its current £7.85p/h (£9.15 in London) to £8.25p/h (£9.40 in London). If you’d like to learn more about the Living Wage and are considering how you and your business can implement it, or how the National Living Wage will affect you when it comes in next year, please get in touch with The HR Dept to discuss.

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