Are Employers Obliged to Pay Staff the Living Wage?
Boris Johnson, as the Mayor of London, has been a very vocal promoter of the Living Wage. But what is it and how does it affect employers?
To be clear, the only statutory minimum level of pay that employers are obliged to give their staff is the National Minimum Wage (NMW). The NMW rates are set out in the table below, with the standard adult rate currently set at £6.50 per hour.
The Living Wage is a level of pay somewhat higher than the NMW. Campaigners say it is the lowest amount people need to earn in order to avoid living in poverty. The current rate is £7.85 per hour (£9.15 in London). It is reviewed annually by an independent body, and set by the Living Wage Foundation. Unlike the NMW, there are no variations to the rate dependent on the employee's age.
Employers in traditionally low paid industries may choose to pay the Living Wage for a number of reasons, including to improve recruitment and retention, to engender good staff morale, and to promote themselves as socially responsible employers.