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Living or Minimum wages: what do you have to pay?

What’s the difference between a Minimum Wage and a Living Wage? Well, it depends who you ask.

There’s a compulsory Living Wage all employers have to pay, although critics say that just changed the name of the Minimum Wage – and it’s lower than the “real but voluntary” Living Wage.

Currently, employers have to pay a minimum of £8.21 an hour for any employees over 25 and that rises to £8.72 in April 2020. There are lower minimum pay levels for people under 21 – currently £7.70 per hour – and for younger employees.

There is also a voluntary Living Wage campaign, which might change name to avoid confusion with the compulsory Living Wage. From April that’s £9.30 an hour outside London and £10.75 an hour in London. Employers who have signed up to the LW campaign have until 1st April 2020 to raise anyone’s pay to the new minimum levels.

So far, so confusing. Let’s set out what this means in terms of pay and start with the compulsory amounts, which depend on how long your working week is.

From April 2020 the compulsory minimum pay levels are:

Age/ TypePer hourAnnual salary for working 37.5 hours per weekAnnual salary for working 40 hours per week
25 and above£8.72£17,004.00£18,137.60
21-24£8.20£15,990.00£17,056.00
18-20£6.45£12,577.50£13,416.00
Under 18£4.55£8,872.50£9,464.00
Apprentice£4.15£8,092.50£8,632.00
Living Wage£9.30£18,135.00£19,344.00

So what does all this mean in reality? From April each year, the minimum legal pay levels increase although the details are not known until close to the time. Retail, catering and hospitality employers are raising concerns about having to increase pay levels every year.

The “real” Living Wage at £9.30 involves paying everyone aged older than 18 salaries of £18,135 – £19,344 depending on the length of your working week.

If you pay everyone at least £9.30 an hour, then you can get recognition for this by signing up to the “real” Living Wage at http://livingwagebrighton.co.uk/. It’s free, it only takes a few minutes and it means you get credit for being a good payer for prospective new recruits.

 

By Brian

Updated with all the new pay levels from April 2020.

 

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