According to the Living Wage Foundation, over 250,000 people will see wages boosted by 20p to £9.50 if their employer has signed up to the ‘Real Living Wage‘, and employees should receive the new rate in May 2021. Not to be confused with the National Living Wage (NLW), the Real Living Wage is a recommendation of the Living Wage Foundation that ensure all workers earn a wage that covers the true cost of living.
Real Living Wage is Voluntary for Employers
More than 6,900 employers have so far adopted the Real Living Wage scheme. A further 800 more employers have joined the scheme since the start of lockdown in March 2020, including the All England Lawn Tennis Club, Network Rail, Tate and Lyle and Capital One. The initiative relates to workers aged 18 and over and is entirely voluntary on the part of employers.
The recommended rates for the Real Living Wage are reviewed and revised each November. The recent increase will see pay rising to £10.85 in London (up from £10.75 last year) and £9.50 for the rest of the UK (increased from £9.30). This latest increase intends to support workers through the COVID-19 pandemic. The Living Wage Foundation estimates that a full-time worker employed 37.5 hours per week will receive more than £1,500 more annually under the new Real Living Wage rate compared to the current government minimum, increasing to £4,000 for London based workers.
National Living Wage compared to Real Living Wage
The National Living Wage, which is part of the mandatory National Minimum Wage (NMW) Scheme, is set at £8.72 an hour for those aged over 25. However, the age from which workers are eligible for the statutory National Living Wage will drop from 25 to 23 years old from 1 April 2021, unless postponed due to the coronavirus pandemic.
Research by the Living Wage Foundation reveals that 20% of employees in the UK, equivalent to 5.5 million jobs, are still paid less than the Real Living Wage. Scotland had the lowest proportion of jobs paying below the Real Living Wage at 15.2% while Northern Ireland had the highest proportion at 25.3%.
The study also found that in April 2020, women were more likely to be paid below the Real Living Wage than men. However, since 2012, this pay gap has slightly narrowed and continued to do so in 2019-2020; but as many as 60% of jobs below the Real Living Wage (3.3 million), were held by women in April 2020.
Legal Obligations
Employers are not legally required to pay their workers the ‘Real Living Wage’ unless they have a contractual obligation to do so, which is rare. Paying the Real Living Wage is generally more of an employee and public relations issue than a legal one. However, not paying the Real Living Wage would mean that the employer would not be able to claim the Living Wage Foundation accreditation.
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