This is a 70p increase on the current national minimum wage for those aged 21 and over, and 50p higher than the national minimum wage due to come into effect in October 2015. From October, the national minimum wage rate will stand at £5.30 an hour for staff aged 18-21 and £3.87 for workers under 18.
However, it remains below the Living Wage Foundation’s recommended living wage rate of £7.85 and £9.15 in London. This raises the question as to whether, come next April, employers will pay staff the higher, voluntary, living wage rate recommended by the foundation or whether they will hold at the slightly lower, compulsory rate set by the government.
Employers such as Burberry, Chelsea Football Club, GlaxoSmithKline (GSK), Ikea UK, Oliver Bonas, The University of Oxford and Yorkshire Water have already pledged to pay staff the Living Wage Foundation’s hourly rate of £7.85.
So, given that research from the Resolution Foundation, published in September 2015, found that almost a third (29%) of female employees in the UK are set to receive a pay rise as a result of the government’s new national living wage, is it in employers’ and employees’ best interests for organisations to go above and beyond the legal minimum and pay staff the amount that the Living Wage Foundation recommends?
Linda Holbeche, director of the Holbeche Partnership, said: “While it’s good news that the government has at last made payment of a national living wage compulsory for employers, the hourly rate proposed, based on median earnings, will still be less than that paid voluntarily now by employers which have signed up to the Living Wage Foundation’s standard, which is calculated according to the actual cost of living.
”It is also significantly less than the rate currently paid to those employees who benefit from the London living wage. Staff under 25 in particular will still miss out.
“On the plus side, women and older workers, who have traditionally had the lion’s share of part-time, insecure and low-paid work, should benefit. The risk is that, rather than benefiting workers, the national living wage could actually make work even less secure as employers strive to keep their costs to the minimum.”
While some employers will naturally gravitate towards paying the legal minimum, others will be more generous if circumstances allow.
Wyn Derbyshire, partner in the employment and pensions team at King and Wood Mallesons, added: “Some may regard the introduction of the national living wage as an opportunity to gain PR and HR advantages by seeking to raise salaries in anticipation of the introduction of the living wage requirements.”