BBC News reported on 9th November 2020 that since the start of lockdown, over 800 more employers had signed up to the Living Wage Foundation to pay their staff the “Real Living Wage”. It reports that around 7000 employers are already signed up and that the rate has just increased to £9.50 per hour (£10.85 in London).
But what is the real Living Wage? What do employers need to know about it?
The website of the Living Wage Foundation explains it like this:
The real Living Wage is the only UK wage rate that is voluntarily paid by nearly 7,000 UK businesses who believe their staff deserve a wage which meets everyday needs; the weekly shop, or a surprise trip to the dentist. Our employers voluntarily pay the real Living Wage – they also make sure all their employees in London receive the London Living Wage.
Over 250,000 employees have received a pay rise as a result of the Living Wage campaign and we enjoy cross-party support. We have a broad range of employers accredited with the Foundation including 2/5 of the FTSE 100 and big household names including Nationwide, Google, Brewdog, Everton FC and Chelsea FC.
More information can be found here.
What do Employers need to know?
The most important thing is that the Real Living Wage is purely voluntary. It is not to be confused with the National Living Wage (for 25s and over) or the National Minimum Wage (for under 25s) which is compulsory.
The current NLW is £8.72 and the NMW is £8.20 for 21-24 year olds, £6.45 for 18-20s, and £4.55 for under 18s.
If employers fail to pay the NLW or NMW, their employees can take them to an employment tribunal, and they can also be liable for penalties and court proceedings.
There is no legal obligation to sign up to the Real Living Wage. The trend towards more employers signing up in Covid times is interesting. The RLW’s website cites the benefits their members have experienced from signing up, including improved reputation, staff motivation and retention, and better relations between staff and managers. A business quoted in the report says “We really do find the more we take care of people, the more they take care of us.”
On the other hand, every business has different workforce needs and faces different challenges both during Covid and otherwise. It is by no means for all employers. Whilst some businesses have thrived in the current climate, many are currently struggling to pay the employees they have and/or to save their jobs and keep their businesses afloat, especially in the hospitality and leisure sector, and however ethical they might wish to be, the reality is that the only wage threshold they can afford to be concerned about is the National Minimum Wage.