What is the National Living Wage?

Written by Crystal HR & Payroll

28 Jul 2024

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What exactly is the National Living Wage, and how does it affect you? If you're over 23 and working in the UK, it's the minimum hourly wage you're entitled to. Read on to understand why it's important.

FAQ

Q: What is the current rate?
A: As of April 2024, the NLW rate is £11.44 per hour.

Q: Who is eligible?
A: If you’re 23 or older, you’re eligible for the NLW.

Q: How is the National Living Wage different from the National Minimum Wage?
A: Starting from 1st April 2024, the National Living Wage will apply to workers aged 21 and over, aligning the NLW with the NMW for this age group.

Q: How often is the National Living Wage reviewed?
A: The NLW gets a review every year by the Low Pay Commission (LPC).

Q: Why was the National Living Wage introduced?
A: It was introduced to ensure that workers earn enough to cover the basic cost of living, reducing in-work poverty and promoting economic stability.

Comparison Between Living Wage and Minimum Wage

Aspect	National Living Wage (NLW)	National Minimum Wage (NMW)
Applicable Age Group	21 and over	Under 21
Current Rate (as of April 2024)	£11.44 per hour	Varies by age (see table below)
Purpose	Ensure basic cost of living	Minimum pay protection
Review Frequency	Annually by LPC	Annually by LPC

National Living Wage

National Minimum Wage Rates

And here are the NLW rates:

Age Group	Current Rate (as of April 2024)
18-20 years old	£8.60 per hour
16-17 years old	£6.40 per hour
Apprentice	£6.40 per hour

National Minimum Wage Rates

How to Complain if You Are Not Receiving the National Minimum Wage

At this point it's important to know what to do, if you feel you are not being paid the national living or minimum wage. If you believe you are not receiving the National Minimum Wage (NMW) or the National Living Wage (NLW) you are entitled to, it's important to take action. The UK government provides a straightforward process for lodging a complaint through HMRC (His Majesty's Revenue and Customs). Watch the short video from HMRC below, which guides you through the steps to file a complaint. It's important everyone understands their rights and what to do, if they are not being paid correctly.

Why is the National Living Wage Important?

The National Living Wage is about making sure that workers can afford the essentials. It helps reduce income inequality and keeps the economy stable. With the NLW, it is intended to ensure employees can cover their basic needs such as housing, food, and transport.

How is it Decided?

Every year, the Low Pay Commission (LPC) reviews the NLW. They look at things such as inflation, economic conditions and the cost of living to suggest fair wage rates. This process makes sure that the NLW stays relevant and fair.

Key Differences Between NLW and NMW

The National Living Wage and the National Minimum Wage aim to protect workers, but they apply to different age groups. The National Minimum Wage is for younger workers aged 16 to 20, with different rates depending on age while the National Living Wage is specifically for workers aged 21 and over and offers a higher rate.

The Living Wage Foundation

The Living Wage Foundation is an important organization in the UK that goes a step further than the government-mandated NLW. They promote the Real Living Wage, which is higher and based on the actual cost of living, taking into account expenses such as rent, food, and transport. The Foundation calculates this rate to ensure that workers earn enough to meet their everyday needs.

Many employers choose to become accredited Living Wage Employers, committing to paying their staff this higher rate. By doing so, they help improve the quality of life for their employees and demonstrate a commitment to fair pay. As of now, the Real Living Wage is £13.15 per hour in London and £12.00 per hour for the rest of the UK.

What are the Benefits?

Better Standard of Living: Workers earning the NLW can more easily meet their basic needs.
Boosted Productivity: Fair wages lead to happier employees who are more productive, which benefits businesses through lower turnover and better performance.
Economic Growth: Higher wages mean more consumer spending, which drives economic growth and supports local businesses.