Living wage vs minimum wage – What’s the difference?

Understanding the difference between these two types of wages can help you know if you're being paid fairly. Let's break it down in simple terms. 

What is the minimum wage? 

The minimum wage is the lowest amount an employer can legally pay you per hour. It's set by the government and applies to most workers in the UK. 

The government updates minimum wage rates every year, usually in April. The amount you get depends on your age and whether you're an apprentice. Your employer must pay you at least the minimum wage for your age group. If they don't, they're breaking the law. 

What is the living wage? 

The living wage is different. It's a voluntary hourly rate that employers can choose to pay. It's based on what people actually need to live on – not just survive, but cover basic costs like rent, food, bills, and travel. 

The Living Wage Foundation calculates this rate. They look at everyday living costs and work out what people truly need to get by. There are two living wage rates: the UK Living Wage for most of the country, and the London Living Wage, which is higher because living costs in London are more expensive. 

Employers don't have to pay the living wage - it's voluntary. But many choose to because they want to support their workers and be seen as fair employers. 

The difference between living wage and minimum wage 

Here's how minimum wage and living wage compare: 

Why does this matter to you? 

Understanding these wages helps you: 

Know your rights – You can check if your employer is paying you the legal minimum for your age. 

Compare job offers – If a company advertises they pay the living wage, you know they're offering more than the legal minimum. 

Plan your budget – You can see if your income matches what experts say you need to live on. 

Value your work – You can have informed conversations about pay with employers. 

Can your employer pay less than minimum wage? 

In most cases, no. Your employer must pay you at least the minimum wage for your age group. There are very few exceptions, such as if you're self-employed, doing voluntary work, or on work experience. 

If you think your employer isn't paying you the minimum wage, you can report them to HMRC. You have legal protection if you raise concerns about your pay. 

What if you're paid the living wage? 

If your employer pays the living wage, they've chosen to pay you more than the legal minimum. Living wage employers often get accredited by the Living Wage Foundation. Thousands of UK employers have signed up, including major retailers, small businesses, charities, and public sector organisations. 

The living wage only applies to workers aged 18 and over at accredited employers. Because it's voluntary, not all companies pay it. 

How to check if you're being paid correctly 

Want to make sure you're getting paid the right amount? Check the current minimum wage rates for your age on the government website. Look at your payslip and work out your hourly rate, including all hours worked. 

If something doesn't look right, speak to your employer first. It might be a simple mistake. If that doesn't help, you can contact ACAS for free advice. 

Watch out for confusing terminology 

The government calls its minimum wage for workers over 21 the "National Living Wage". But this is different from the real living wage calculated by the Living Wage Foundation. 

The National Living Wage is just the government's minimum wage for adults. The real living wage is based on actual living costs and is usually higher. Don't let the similar names confuse you. 

The bottom line 

The minimum wage is your legal right – the lowest amount you can be paid per hour based on your age. The living wage is a higher, voluntary rate based on what you actually need to live on. 

Both wages are important. The minimum wage protects you by law. The living wage shows employers who go the extra mile to support their workers fairly. 

Knowing the difference helps you understand your worth, check you're being paid correctly, and make informed choices about where you work.