What is Minimum Wage? What about Living Wages?
Whether you’re starting your first job or thinking about your future career, it’s crucial to know your rights when it comes to pay. In the UK, two terms you’ll often hear are the National Minimum Wage (NMW) and the Living Wage (LW), but what exactly do they mean and how do they affect you? Let’s break it down.
The National Minimum Wage (NMW)
The NMW is the legal minimum amount that most workers in the UK are entitled to be paid per hour by their employer. It’s there to ensure that everyone receives a fair wage for the work they do, regardless of their age or the industry they work in.
Another term you might hear is, ‘National Living Wage’. This is the name given by the government to the NMW for workers aged 21 and over.
As of April 2024, the National Minimum Wage (NMW) rates are:
Apprentice (under 19 or 1st year)*
£6.40
per hour
Under 18
£6.40
per hour
18-20
£8.60
per hour
21+
£11.44
per hour
* Apprentices who are over 19 AND have completed their first year are entitled to the National Living Wage for their age.
Your employer should always pay you at least the minimum wage for your age group, and it’s against the law for them not to do so.
If you are paid the minimum wage, your employer cannot deduct the cost of expenses like uniform or training from your wage or make you work unpaid overtime. Any of these will cause your pay to fall below minimum wage, which is against the law.
Back in 2023, some big-name companies were named and shamed for doing this and were therefore not paying their workers the minimum wage.
The Living Wage (LW)
The Living Wage, on the other hand, is a voluntary hourly rate set by the Living Wage Foundation that’s calculated based on the basic cost of living in the UK.
Unlike the NMW, the Living Wage isn’t a legal requirement, but many employers choose to pay it as a commitment to ensuring their workers can afford a decent standard of living.
As of October 2023, the real Living Wage, as set by the Living Wage Foundation, is £12 per hour across the UK and £13.15 per hour in London, where living costs are higher. This rate is often considered the amount needed for a worker to meet their basic needs and have a little extra for emergencies or to save for the future.
It is also reviewed and changed every year, so it’s worth checking it regularly too, particularly if your employer is an accredited Living Wage Employer.
While not all employers pay the Living Wage, many do, and it’s worth looking out for employers who are accredited by the Living Wage Foundation if you’re searching for a job.
What’s the Difference?
The key difference between the NMW and the LW lies in their purpose and how they’re calculated. The NMW is a legal minimum set by the government to prevent exploitation and ensure fair pay, while the LW is based on the real cost of living and is voluntarily paid by some employers who want to go above and beyond the legal requirements.
For the 2024 NMW and LW, someone working a 35-hour week job would earning the following annual salaries (i.e. gross income before tax or pension deductions):
Annual salaries for the National Minimum Wage:
Apprentice (under 19 or 1st year)
£11,648
Under 18
£11,648
18-20
£15,652
21+
£20,821
Annual salaries for the Living Wage:
Across the UK
£21,840
In London
£23,933
Why Does It Matter to You?
Understanding the NMW and the LW is crucial because it affects your income and quality of life. Making sure you’re paid at least the minimum wage for your age group ensures you’re not being taken advantage of, while being paid the Living Wage can mean you have more financial stability and security.
If you think you might not be paid the NMW, there’s some further info at the bottom of this article.
Knowing your rights when it comes to pay empowers you in the workplace. Whether you’re negotiating your salary for a new job or discussing a pay rise with your current employer, being informed about the NMW and the LW gives you the confidence to speak up and ensure you’re getting the fair pay you deserve.
Three top tips
Know your rights
Familiarise yourself with the current National Minimum Wage rates for your age group. It’s essential to know what you’re entitled to and to speak up if you’re not being paid fairly.
Research employers
When job hunting, look out for employers who are accredited by the Living Wage Foundation. Working for an employer who pays the Living Wage can noticeably improve your financial well-being and job satisfaction.
Track your hours
Keep a record of the hours you work to ensure you’re being paid accurately. If you notice differences between your pay and the hours you’ve worked, raise the issue with your employer promptly. And remember – being asked to turn up 15 minutes early is work time and should be counted.
In conclusion, while the NMW sets the legal minimum wage that employers must pay, the Living Wage reflects the real cost of living in the UK and is voluntarily paid by some employers. Knowing both figures will help ensure you’re fairly compensated for your time and effort at work.
What should I do if I think I’m being paid less that the National Living Wage?
If you believe you are being paid less than the minimum wage, it’s essential to take action to address the situation. Here’s what you should do:
- Check your payslip – Review your payslip to ensure that you are being paid the correct hourly rate for your age group. Make sure to factor in any deductions or bonuses that may affect your overall pay. This article can help you work out what all the numbers on your payslip mean. You can also use this calculator by gov.uk to help you work it out.
- Gather evidence – Keep records of your hours worked, including start and finish times, breaks taken, and any overtime hours -. tThis documentation will serve as evidence to support your claim if you need to take further action.
- Raise the issue with your employer – Schedule a meeting with your employer to discuss your concerns about being paid below the minimum wage. Be polite but firm in presenting your evidence and explaining why you believe you are not receiving the correct pay.
- Seek resolution – Give your employer the opportunity to rectify the situation. They may have made an error in calculating your wages or may not be aware of the current minimum wage. Ask for back pay for any hours already worked at less than the minimum wage rate.
- Seek external support – If your employer fails to address the issue or disputes your claim, call the Acas helpline: 0300 123 1100. Acas will talk you through your options to formally resolve the issue through an employment tribunal or HMRC. Acas (Advisory, Conciliation and Arbitration Service) provide free, impartial and confidential advice on workplace rights, rules and best practice. They are an independent public body that receives funding from the government.
If in doubt, you can call Acas (0300 123 1100) for advice during any of these steps and they will help you work out what to do from there.
