Are you worth it? The National Minimum Wage & National Living Wage explained
Over the last week, I've noted a couple of local businesses and one national franchise that were advertising for opportunities to join their organisations and confirmed a salary of between two figures. In each of these cases, the salaries advertised were beneath the National Minimum Wage (NMW) and National Living Wage (NLW) for individuals aged 25 and over and only just fall into the category of 21-24 at the upper end. Now to give them the benefit of the doubt, perhaps they are looking to attract and recruit individuals of between the ages of 18-24 and think that this is a way to do that; but it does seem and feel unlikely given the skills required. It got me thinking all about when I started my journey in the working world, what we are really "worth" and why it's important for employers to understand the difference between the NMW and the NLW in 2020.
Lets start with some of the basics. Well, the NMW is the lowest or minimum level of remuneration (pay) that an individual can receive, from an employer, for the services that they supply them with i.e work. In order to qualify for NMW individuals must be of school leaving age (which in England is 16* or 18). The NMW applies to any individuals of working age. The government divides the NMW into bands 25 & over, 21-24, 18-20, Under 18 and Apprentices. At the time of writing (February 2020) the NMW rates are £8.21 for 25 & over; £7.71 for 21-24; £6.15 for 18 to 20; £4.35 for under 18's and £3.90 for Apprentices.
I'm often asked if there are any exceptions for when an employer has to offer the NMW to their employees and like all legislation there are of course some exceptions but very few. Instead I like to encourage employers to think about who "is" included and who is worth receiving the NMW. These include all part timers, casual labourers, agency workers, homeworkers, apprentices, employees on probation, trainees, agricultural workers and foreign workers or offshore workers. The most common exceptions are self employed people, company directors, volunteers, some government programmes, family members of the employer living in their home, higher education students on work placements or gap years or job centre plus work trial programmes. There are others but they are fairly specific to certain industries. I always encourage employers that if they wish to consider making payment to individuals that fall outside of the NMW scheme e.g placement or work experience then it's always a nice to do, but not essential.
Now back at the beginning, I mentioned the National Living Wage (NLW) and I wanted to clarify the difference. The
NLW is only applicable presently to individuals aged 25 and over, anyone under that age still falls under the NMW regulations. The NLW was a term coined in 2016 by the conservative government as a way by which to address living costs in the UK. The NMW & the NLW are the same for anyone aged over 25, £8.21 as of April 2019. This is soon due to increase by a fairly substantial 51p to £8.72 in April 2020. NMW rates will also increase. The Living Wage Foundation is a fantastic organisation that offers employers the opportunity to accredit themselves as 'Living Wage Employer', a similar concept to Investors in People. They support the recognition of employers to pay a "Real Living Wage" of £9.30 across the UK and £10.75 in London for anyone over the age of 18. They have done substantial research into the real living cost of life in the UK and feel that this is a fairer value to pay employees. In the South East alone there are over 550 employers signed up to their Living Wage badge. Local examples include Nestle, Oxfam, Santander UK, RSA Insurance, Merstham Community Foundation Trust, Home Instead, Air Ambulance, St Marks Church Reigate and Kingston Smith LLP. Wouldn't it be wonderful if more employers could sign up to the Living Foundation?!
Before I finish, I wanted to add context for why we have these minimum levels of wage and how fundamentally important they are, I believe, to the DNA of our working culture. At university I studied social sciences and we learnt a lot about the working movement. At the turn of the 20th century, Lloyd George, the prime minister at the time introduced 'trade wages' in four industrial sectors, chain-making, dressmaking, paper making and lace making. By the 1920's further governments had added the coal, agricultural and other factory industries to the list, with now almost 2 million people being treated to a fair wage. The world changed during the 20's, 30's, 40's and it wasn't until the 1950's and 1960's that more employers started to embrace the trade wages and factory conditions etc. In the 1980's we saw a change again to our working culture, the Thatcher years, conservatism and a rise in entrepreneurship meant that there was less attention on the NMW. Finally, this changed when in 1998 the Labour Government announced that in 1999 the National Minimum Wage would be introduced. I remember the change so well.
In 1997 I started my first job at the Co-op (in the furnishings department) and my starting wage was £1.68 (I was almost 16). When I turned 16, it was meant to increase to £2.64 an hour. My 16th birthday came and went and I received no such increment. I asked my line manager and she just shrugged her shoulders and told me to go to the finance department. Back then, the finance department consisted of about 10 ladies in their 50's and 60's who sat at typewriters on the 2nd floor. I ventured up there, explained what had happened and waited. They smiled, shook their heads and said "Mr M would have to authorise that, he's the store manager". Disappointed I returned home and told my Dad. My Dad worked in HR and was fairly senior, so he encouraged me to write a letter and deliver it, in person. So, I did. I outlined how fair it was to receive the same as my male and female co-workers, what had been promised to me at the interview and that it should be backdated to my 16th birthday. The following Saturday I took my letter, I gave it to his secretary and she popped it into his in tray. Some time later on in my shift, my manager marched over and said "Mr M wants to see you at 6pm". I went to see him, he invited me in and said to sit down. This man in his 60s, who everyone said was scary, looked gentle, kind and asked me to explain my letter. I did and he simply said, I'll look into it and smiled.
Three weeks later, on pay day, in my brown envelope (yes no BACS back then!) I received a little over £100 extra (three months backdated pay) and a hand written note which just said "You were right, there was an oversight". I've never forgotten. I've never stood down ever since when it comes to making my case over a fair wage discrepancy and I encourage everyone I ever hear a case of "it feels unfair" say, to do just the same, know your worth, be counted, know your rights, and fight for that fairness.
For more information on the Living Wage foundation visit www.livingworkfoundation.org.uk
For more information on how to support a fair discussion with your employer, contact me directly.