The minimum wage has been a hot topic in the UK recently, especially in the political sphere. With 40% of those in receipt of Universal Credit also in work and a rising rate of inflation, the cost of living crisis has us asking if the minimum wage in the UK is fair. But what are the legal factors concerning minimum wage and exactly what is the minimum wage anyway?
Age And The UK Minimum Wage
The minimum wage is dependent on age. This means younger people who are starting out in work and are presumably living in shared accommodation or with guardians earn less and should mean that those with dependants are entitled to more. Of course, circumstances are often not conditional on age so the minimum wage is currently set at £9.50 for those over the age of 23 years. This rose on April 1st 2022 from £8.91.
There was a 6.6% rise in the national minimum wage in 2022 with a higher 9.8% rise for 21-22-year-olds and an 11% rise for apprentice wages.
Minimum Wage For Apprenticeships
UK employers must provide apprentices’ with a minimum wage of £4.81 per hour, as of April 2022. Employers are responsible for paying their apprentices’ under a contract of employment that also provide full training sufficient enough for them to pass their assessment. Apprenticeships must be approved and can be found by employers through Gov.co.uk.
In addition to minimum wage, apprentices are entitled to 20 days’ holiday per year and 20% of their paid hours should be used for training.
What Is Considered Living Wage In The UK?
National Living Wage is established by the Living Wage Foundation. They aim to encourage employers to commit to paying a living wage that is in line with the cost of living, meaning it enables an employee to meet basic living costs and everyday needs.
As of July 2022, the Living Wage Foundation set UK living wage at £9.90 which is 4.2% higher than the minimum wage. However, they also differentiate between the rest of the UK and London, where living costs are considerably higher. Therefore, the living wage in London is currently set at £11.05. The national minimum wage falls 16% short of this.
Employers choose to join the Living Wage Foundation to establish themselves as businesses that champion (and implement) fair wages. This includes half of the FTSE 100. Many companies signed up to the scheme claim that it has improved employer-employee relationships as well as the reputation of the business.
Should Employers Pay More Than Minimum Wage In The UK?
Although the national minimum wage has risen in 2022, there is still plenty of discussion about whether it is a fair wage. With the rising cost of living, inflation and a shortage of workers in many roles that typically pay minimum wage, there may well be pressure to further increase the minimum wage.
Despite shortening the gap between living and minimum wage, an imbalance does still exist, particularly in London where the cost of living is higher. Several factors can influence this, including employee benefits and whether a role is based onsite or remotely.
Whether employees opt for minimum wage or pay more is entirely dependent on circumstances and preferences. Legally, only the minimum wage is required. However, companies who offer over minimum wage (for typically minimum wage positions) may find they:
- Attract more talent
- Retain more talent
- Improve their reputation and increase their chances of achieving other awards and accreditations
- Stand out from competitors
Having said this, there are plenty of reasons also to pay minimum wage for lower-skilled roles, especially if you are a new business, start-up or are in the process of securing funding. Employers should not be deterred from providing employment opportunities because they cannot afford to pay above minimum wage. However, you may wish to consider ensuring you’re offering as much value as you expect employers to provide to your business. You may do so by providing:
- A supportive, inclusive and friendly working environment
- Training and development opportunities
- Paths for progression (if desired by candidates)
- The opportunity to earn more if certain targets are met or goals are achieved
For professional legal advice on employer responsibilities and legal requirements, meet our employment and HR legal professionals.