Hundreds of thousands of workers in London and the rest of the UK are in line for a pay rise after it was announced the ‘real living wage’ would go up by 70p an hour.
The rate – which for the UK capital will now be set at £13.85 per hour and £12.60 per hour for the rest of the country, a rise of 70p and 60p, respectively – is calculated by campaigners at the Living Wage Foundation.
But it is distinct from the national living wage, which is set by the government every year.
Although not a statutory obligation for all employers, it will mean an uplift for those working for companies which are signed up to the campaign.
Labour has also promised to ensure workers are paid a “genuine living wage”, regardless of age, but further details of what this could mean in practice are unlikely to be known until the chancellor unveils her autumn budget.
Here, Yahoo News UK explains what the rules are, who they apply to and what to do if your employer isn’t paying you what they are supposed to.
What is it the national living wage and when was it introduced?
The policy currently known as the national living wage was introduced by then-chancellor George Osborne in his 2015 budget and updated the existing national minimum wage.
Treasury projections at the time predicted the change would benefit 2.7 million workers directly.
The national living wage is a legal requirements which all employers are expected to adhere to and is calculated as a percentage of the UK’s median earnings.
The minimum wage, which is lower and applies to workers under the age of 21, is set based on negotiations with businesses and trade unions.
Both, however, are distinct from the higher ‘real living wage’, which is a voluntary scheme coordinated by campaign group, the Living Wage Foundation.
How much is it?
The government-set national living wage is currently £11.44 per hour and applies to workers over the age of 21.
Workers of at least school age, but under 21, must be paid at least the national minimum wage, which is also mandated by the government.
This is currently set at £8.60 per hour for 18-20-year-olds or £6.40 per hour for under-18s.
However, both of these are lower than the rates advocated for by the Living Wage Foundation, which sets is ‘real living wage’ at £13.85 per hour for workers in London and £12.60 per hour for workers elsewhere in the UK.
This higher rate is calculated according to the wider cost of essential goods and services.
What are the planned changes?
Millions of public sector workers have already been told to expect inflation-busting pay rises from the new Labour government.
Chancellor Rachel Reeves is reportedly seeking to raise £40bn in her upcoming autumn budget to fund a series of promises, including a pledge to ensure minimum pay is a “genuine living wage”, regardless of age.
However, few other details have been released so far to suggest what this could mean for pay packets.
What can I do if I’m not being paid enough?
If you are not being paid up to the rate of either the national living wage or the minimum wage, depending which applies to you, consumer organisation Citizens Advice recommends first having an “informal chat” with your employer.
The government has a pay calculator service to help with such discussions.
If your employer agrees they have made a mistake, arrangements should be made immediately to pay you what you are owed.
This should not be paid-in-kind with other benefits such as free meals or a greater share of tips or gratuities.
If you still have issues, you can get advice from organisations such as Citizens Advice, or via Acas, the arbitration service.