What is the new minimum wage rate and when will it take effect?
Millions of workers will get a boost in their earnings as the chancellor, Rishi Sunak, is set to increase the minimum hourly pay for over-23s.
The rise was confirmed as part of the Autumn Budget announcement on Wednesday.
But how much is the pay bump, and how does the national minimum wage differ from the national living wage?
Here is all you need to know.
What is the national living wage?
The so-called living wage is the government’s set minimum rate which employers must pay staff aged 23 and over for each hour worked.
Essentially, if you’re over 23, you are legally entitled to the living wage. If you’re under 23, you are only entitled to the national minimum wage, which varies based on your age.
The living wage is currently £8.91 an hour – but this will increase to £9.50 next April.
This means employees will receive 6.6% more in their pay packets – amounting to an extra £1,074 a year before tax.
That works out to around an extra £90 per month, making it the third-biggest hike since the 2008 financial crisis
You can check if you are being paid the correct minimum wage on the goverment website.
The minimum wage for people aged 21-22 is set to rise from £8.36 to £9.18 an hour, while the Apprentice Rate will increase from £4.30 to £4.81 an hour.
As well as the national living wage, there is an unofficial and voluntary ‘real living wage’.
This is calculated by the Living Wage Foundation, a campaigning organisation, and is based directly on the cost of living.
According to the foundation, the ‘real’ living wage is currently £9.50 an hour for workers across the UK and £10.85 in London.
If you want to check if your employer has signed up for the voluntary scheme, then visit the Living Wage website to view the full list of accredited companies.
What is the national minimum wage?
This is the minimum pay per hour all workers are entitled to.
People classed as ‘workers’ must be at least school-leaving age to claim the wage.
The current minimum wage rates as of April 1, 2021, are:
- Ages 23 and over (The living wage): £8.91
- Ages 21-22: £8.36
- Ages 18-20: £6.56
- Under-18: £4.62
- Apprentices: £4.30
From April 2022 these will change to:
- Ages 23 and over £9.50
- Ages 21-22: £9.18
- Ages 18-20: £6.83
- Under 18s: £4.81
- Apprentices: £4.81
Some workers aren’t entitled to the minimum wage, such as self-employed people, volunteers, prisoners, or people on pre-apprenticeships schemes.
Find out more on the government website.
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Autumn Budget 2021: All the key points from Rishi Sunak's plan
Rishi Sunak has announced the largest increase in public spending in a century in a budget that has promised ‘the start of a new post-Covid economy’.
Many of the headline policies include a rise in the national living wage and a pledge to spend billions on the NHS.
Here are the main changes you need to know about:
- Universal Credit raised for 1,700,000 people with 8p boost to pay packet
- Fuel duty will not increase as prices at the pumps hit record high
- Millions of key workers set to be paid more as Rishi Sunak confirms end to pay freeze
- Rishi Sunak promises £150,000,000,000 spending frenzy in Budget statement
- Rishi Sunak confirms increase of national living wage to £9.50 an hour
- Pints of beer cut by 3p and sparkling wine is about to become cheaper
- Families will get £300,000,000 in new ‘Start for Life’ campaign
- Thousands of football pitches will be built to boost 2030 World Cup bid
- Prepare for a pricey Christmas as inflation ‘likely to rise’