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Topic: Pay and pensions

Real living wage increase advice letter
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Real living wage increase advice letter

Real Living Wage increase advice letter

The real Living Wage is an hourly rate which is calculated independently according to the real cost of living in the UK and London. It’s entirely voluntary. If you do pay the real Living Wage, our letter can be used to notify your staff of their pay rise following the annual updating announcement.

What is it?

The Living Wage, sometimes called the real Living Wage, is entirely separate from the government’s mandatory national minimum wage (NMW) and national living wage (NLW) and should not be confused with them. The real Living Wage is an hourly rate which is calculated independently according to the real cost of living in the UK and London, based on a basket of household goods and services, and it’s updated annually, with the new rates being announced on the Monday of the first week of November each year. There are two rates – one for London, which covers all the boroughs in Greater London, and one for the rest of the UK and they apply to workers aged 18 and over. The rates are calculated by the Resolution Foundation and overseen by the Living Wage Commission (which in turn is appointed by the Living Wage Foundation), based on the best available evidence about living standards in London and the UK. Importantly, the real Living Wage is entirely voluntary, and so you don’t have to pay it if you can’t afford to or don’t want to. The real Living Wage rates are higher than the mandatory NMW and NLW rates because they’re calculated based on what people need to get by, not just the government minimum. The Living Wage Foundation offers accreditation to employers who pay the real Living Wage. The accreditation is a signed licence between the Living Wage Foundation and the employer.

Implementation

Accredited Living Wage employers are required to implement any updated hourly rates as soon as possible and within six months of the annual November announcement. Only guaranteed non-deferred payments can be included in the real Living Wage rates, so this would exclude pension payments, non-guaranteed bonuses, sales-related commission, etc.

Letter contents

If you’re an accredited Living Wage employer, or you’re otherwise happy to pay the real Living Wage even though you’re not accredited, our Real Living Wage Increase Advice Letter enables you to notify your staff that their hourly rate of pay will increase as a result of the annual updating exercise. It’s up to you exactly when the pay increase is to become effective, provided it’s within six months of the Living Wage Foundation’s announcement if you’re accredited. It makes sense though for you to coincide the pay increase with the start of a new weekly or monthly pay period.

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