Millions of workers will get a boost in their earnings as Chancellor Rishi Sunak is set to increase the minimum hourly pay for over-23s.
The rise was initially confirmed as part of the Autumn Budget announcement back in October 2021.
But how much is the pay bump, and how does the National Minimum Wage differ from the National Living Wage?
Here’s what you should know.
What is the National Living Wage?
The so-called National Living Wage is the government’s set minimum rate, that employers must pay staff aged 23 and over for each hour worked.
Essentially, if you’re over 23, you are legally entitled to the National Living wage. If you’re under 23, you are only entitled to the National Minimum Wage, which varies based on your age.
The living wage is currently £8.91 an hour – but this will soon increase to £9.50 from Friday, April 1, 2022.
This means employees will receive 6.6% more in their pay packets, amounting to an extra £1,074 a year before tax.
That works out to around an extra £90 per month, making it the third-biggest hike since the 2008 financial crisis
You can check if you are being paid the correct minimum wage on the government website.
The minimum wage for people aged 21-22 is set to rise from £8.36 to £9.18 an hour. The Apprentice Rate will also slightly increase from £4.30 to £4.81 an hour.
As well as the National Living Wage, there is an unofficial Real Living Wage.
This is calculated by the campaigning organisation Living Wage Foundation, which sets its sum based directly on the actual cost of living – things like paying for transport, rent, energy bills, etc.
According to the foundation, the Real Living Wage is currently £9.90 an hour for workers across the UK and £11.05 in London.
It’s a voluntary thing, meaning employers can choose to sign up to the Real Living Wage pledge only if they want to.
To check if your employer has signed up, visit the Living Wage website to view the full list of accredited companies.
What is the National Minimum Wage?
This is the minimum pay per hour most workers are entitled to.
People classed as ‘workers’ must be of at least school-leaving age to claim this wage.
The current National Minimum Wage rates right now are:
- Ages 23 and over: £8.91 (aka the National Living Wage)
- Ages 21-22: £8.36
- Ages 18-20: £6.56
- Under-18: £4.62
- Apprentices: £4.30
From April 2022, these will change to:
- Ages 23 and over: £9.50 (aka the National Living Wage)
- Ages 21-22: £9.18
- Ages 18-20: £6.83
- Under 18s: £4.81
- Apprentices: £4.81.
However, this doesn’t apply to all workers. Self-employed people, volunteers, prisoners, or people on pre-apprenticeships schemes don’t qualify for the National Minimum Wage.
Note that these numbers usually change each year, and should go up again in April 2023.
You can find out more on the government website.
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