The National Minimum Wage (NMW) and National Living Wage (NLW) are the minimum amount of pay a worker should receive in the UK, based on certain criteria. In this blog, we'll cover what these terms mean and who's eligible.
What is the National Minimum Wage?
The National Minimum Wage is the legal minimum employers must pay their staff, as set by the government.
There are a few different terms covering different entitlements.
If you're aged 23 or over, this is called the National Living Wage (NLW)
If you're aged under 23 (or an apprentice), this is called the National Minimum Wage (NMW)
The rates for the minimum wage depend on your age, and whether you're an apprentice.
What is the National Living Wage?
The NLW applies to all workers over 23 and is currently £10.42 an hour as of April 2023.
Confusingly, the NLW was simply a renaming of the NMW and not truly linked to the cost of living.
What is the Real Living Wage?
The 'Real Living Wage' is calculated independently of the government by the Living Wage Foundation.
The Real Living Wage is a rate that is voluntarily paid by more than 7,000 UK businesses to help their employees meet everyday needs. It is not a legal requirement.
The National Minimum Wage and National Living Wage change at the start of April each year.
What's the difference between National Minimum Wage and National Living Wage?
The difference comes down to the age of an employee.
Workers aged 23 and 24 are now entitled to the lower National Living Wage.
The government website details current hourly rates for those aged 21-22, 18-20, under 18, and apprentices, along with rates as of April 2023.
Whereas the NLW is the minimum rate employers are allowed to pay employees, the Real Living Wage is the payment rate recommended by the independent Living Wage Foundation, among other organisations. Although it isn't a legal requirement for employers to pay the Real Living Wage, increasing numbers of businesses are choosing to do so in recognition of the financial challenges faced by many employees.
The rates are calculated annually by the Resolution Foundation which is overseen by the Living Wage Commission and are based on the most recent and accurate data regarding living standards in London and the UK.
Who is entitled to receive the National Minimum Wage or National Living Wage?
Author: Laura Sands
Laura is a writer who enjoys getting into the detail of subjects and sharing that knowledge with snappy, interesting content. When not typing away, she enjoys walks in the woods and curling up with a good book and mug of something hot.