Minimum Wage Vs Living Wage In The UK
Everyone who works in the UK is entitled to a basic hourly wage. This is known as the national minimum wage, and it regulates how much people must be paid.
Most countries have their own legal minimum wage. But the UK is a little different, as there are three different wage categories:
- National Minimum Wage
- National Living Wage
- Real Living Wage
In this article, you’ll learn the differences between the minimum wage and the living wage, and how to tell which one applies to you.
What’s the difference between the UK minimum wage and living wage?
The main difference between the national minimum wage and the national living wage is the employee’s age.
The national minimum wage applies to everyone aged 16 and over (that is, everyone who’s of school leaving age). The national living wage, meanwhile, only applies to people aged 23 and over.
There are also minimum wage limits between these two bandings that apply depending on the employee’s age.
Here are the current rates as of June 2023:
- National Minimum Wage (age 16-17): £5.28 per hour
- National Minimum Wage (age 18-20): £7.49 per hour
- National Minimum Wage (age 21-22): £10.18 per hour
- National Living Wage (age 23+): £10.42 per hour
Your employer is legally obliged to pay you the minimum wage for your age bracket from your birthday. So if you’re aged 17-23, make sure you’re paid the right amount at the right time.
What is the real living wage?
The real living wage is a recommended wage set by a charity called the Living Wage Foundation. The Living Wage Foundation analyses the real cost of living in the UK and recommends a wage based on this.
The real living wage for most of the UK is £10.90 as of June 2023.
Unlike the national minimum wage and national living wage, no employer is legally bound to pay the real living wage. However, lots of companies choose to do this so their staff have the means to live comfortably. Companies that pay the real living wage often call themselves a Living Wage Employer.
Find a list of accredited Living Wage Employers here.
Minimum wage in London vs rest of the UK
It costs more to live in London than elsewhere in the UK. One study found it’s approximately 58% more expensive to achieve a basic standard of living in London than in other UK cities.
The national minimum wage and national living wage don’t account for this, but the real living wage does. As of June 2023, the real living wage for London is £11.95 — an increase of almost 10%.
London employers aren’t legally required to pay the real living wage, but they must pay you the national minimum wage for your age.
Minimum wage for apprentices
Apprentices are still entitled to minimum wage, but the age brackets work slightly differently.
Apprentices should be paid the national minimum wage of £5.28 if they are:
- Aged 18 or younger, or
- Over 18 and in the first year of their apprenticeship.
You’ll be entitled to the minimum wage for your age when you turn 19 and have completed the first year of your apprenticeship.
Are you entitled to minimum wage?
Almost all workers are entitled to the national minimum wage for their age. This includes:
- Full-time workers
- Temporary workers
- Casual workers
- Seasonal workers
- Part-time workers
- Workers on a zero-hours contract
But there are some exceptions. You may not be entitled to the national minimum wage if:
- You’re younger than 16
- You're a company director
- You're a volunteer
- You’re on a work experience placement
- You’re in the armed forces.
What’s included in minimum wage pay?
Your minimum wage is your basic pay rate. That means employers can’t include tips, bonuses, or service charges in your minimum wage pay. These must be paid on top of your standard wage if they’re due.
How does the cost of living affect minimum wage?
The government can decide to increase the legal minimum wage to reflect inflation and other living costs. But it doesn’t always keep pace when inflation is unusually high.
The legal minimum wage doesn’t usually decrease. But as the cost of living increases, you might experience what’s known as a real-terms pay cut.
A real-terms pay cut happens when the cost of basic living goes up, but your pay doesn’t increase. So it costs more to live, leaving you with less disposable income when the bills are paid.
What to do if you think you’re not being paid at the national minimum wage
The best and first thing to do is speak to your employer. They can explain how your pay has been calculated, and check to see if there are any errors.
You can also speak to Acas for free impartial employment advice, including information about pay.
Learn more about living, working, and saving money in the UK
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