THE Real Living Wage has just been increased to £9 an hour.
But what is it, are you entitled to it and how does it compare to the National Living Wage?
What is the Real Living Wage?
It is a higher rate of pay than the government-set compulsory National Living Wage, independently calculated to determine how much money a worker needs to be paid based on the actual cost of living in the UK.
The new Real Living Wage was announced on November 5 and an increase of 2.8 per cent will be welcome news to the 180,000 workers at around 4,700 employers who have signed up to the agreement.
The Real Living Wage is based on what a full-time worker and their family needs to make ends meet.
It takes into account private rental costs, council tax, grocery shopping costs and public transport costs.
In London, the Real Living Wage is 3.4 per cent higher than the £9 an hour rate for the rest of the UK, making it £10.55 an hour.
Is it the law or voluntary?
The Real Living Wage is a voluntary scheme aiming to recognise the actual cost of living – and 4,700 employers have signed up to it.
Under it, the lowest rate of pay is calculated according to the cost of living in the UK based on the changing cost of a basket of groceries.
The amount is set by the charity Living Wage Foundation, and accredited employers include local authorities, NHS trusts, banks, retailers, charities and construction companies.
The foundation’s calculations put the Real Living Wage at £9 an hour – and £10.55 in London.
These rates also apply to over-18s, rather than the over 25 limit on National Living Wage, “in recognition that young people face the same living costs as everyone else”.
And while companies are not legally entitled to pay more than the National Living and Minimum Wages, those which have signed up to the Real Living Wage scheme have pledged to pay all workers those rates.
The rate is calculated every November, and accredited employers are committed to any increases.
When is the new rate announced?
The National Living Wage rate is introduced every April, with Philip Hammond announcing a further boost in the autumn budget.
This raised the rate from £7.83 to £8.21 an hour, which will become law in April 2019.
The Living Wage Foundation director Tess Lanning said: “Employers that pay the Real Living Wage enable their workers to live a life of dignity, supporting them to pay off debts and meet the pressures of rising bills.
“We want to see local councils, universities, football clubs, bus companies and the other major public and private sector employers in every city commit to become Real Living Wage employers.”
What is the difference between the Real Living Wage and the National Living Wage?
The National Living Wage is a legally binding hourly rate for workers aged 25 and over.
It is announced every April and last year’s rate was £7.83 an hour – increased to £8.21 an hour by Philip Hammond in his autumn budget announcement.
The National Living Wage is compulsory whereas the Real Living Wage is not.
It is independently calculated to match the actual cost of living in the UK.
The Real Living Wage is always higher than the National Living Wage.
While the Real Living Wage provides the same rate for anyone over 18, the National Living Wage is only for over-25s and it has different rates for those under 25.
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What should I do if my employer isn’t paying me the Real Living Wage?
While there’s no legal obligation for your employer to pay you more than the National Living Wage, if your company is accredited by the Living Wage Foundation you should be receiving the Real Living Wage.
The foundation’s head of partnerships Graham Griffiths said anyone concerned can use their online “whistleblowing” service, and any employer not adhering to the Real Living Wage faces losing its accreditation.
Graham said one area where it was “challenging” to pay the living wage were retail and hospitality but pointed to Ikea, Aldi and Lidl, which have agreed to pay the same rate.
The scheme was launched in 2001 by parents in East London, and the foundation was set up in 2011.
In 2005 following a growing interest from employers, the Greater London Authority established the Living Wage Unit to calculate what the lowest pay should ideally be.
In 2008 Trust for London selected the scheme as a special initiative and made a grant of more than £1million to campaign for it and set up an accreditation scheme for employers.
In April 2016 it became the inspiration for the government’s higher minimum wage rate, which it re-branded the National Living Wage.
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