An estimated two million workers are set to benefit from an increase to the national living wage announced as part of Jeremy Hunt's autumn statement.
The chancellor announced that the national living wage will increase to £10.42 an hour for workers aged 23 and over from next April, marking a 9.7% rise.
The rise, which represents an increase of over £1,600 a year to the average earnings of a full-time worker, is the biggest ever cash increase for the statutory rate. Rates for younger age groups are also set to rise.
The Living Wage Foundation welcomed the announcement but said the living wage rates would still be lower than the voluntary, so-called "real living wage" of £11.95 in London and £10.90 outside the capital.
Watch: Household disposable incomes are heading for their biggest fall on record
What is the national living wage?
The national living wage (NLW) is the statutory minimum wage for workers aged 23 and over.
Introduced in the UK in April 2016, the policy originally applied to employees aged 25 or over but was extended to those aged 23 and above last year.
Different rates apply to 21-22 year olds, 18-20 year olds, 16-17 year olds and apprentices aged under 19 or in the first year of an apprenticeship.
The national living wage is different to the real living wage, which is calculated and recommended by the Living Wage Foundation.
The government's NLW is based on median earnings, while the Living Wage Foundation calculates independent rates according to the cost of living in London and the UK.
What's the difference between living wage and minimum wage?
The national minimum wage is the minimum pay per hour almost all workers are entitled to, set by the Department for Business, Energy & Industrial Strategy (BEIS) and enforced by HMRC.
Rates differ depending on your age and whether you are an apprentice.
The national living wage is higher than the national minimum wage and described by some as a premium on top of the minimum wage.
Who gets the living wage?
Almost all employees and ‘workers’ over school leaving age in the UK are entitled to receive the national minimum wage or national living wage, including full and part-time employees, agency workers, migrant workers and casual workers.
According to the government website, people classed as ‘workers’ must be at least school leaving age to get the national minimum wage. They must be 23 or over to get the NLW.
Is living wage a legal requirement?
It does not matter how small an employer is, they still have to pay the correct minimum wage.
How much is the increase to the living wage?
Jeremy Hunt has announced that the national living wage will increase from £9.50 to £10.42 an hour for workers aged 23 and over.
The 9.7% rise represents an increase of over £1,600 a year to the average earnings of a full-time worker.
Rates will rise by 10.9% to £10.18 for people aged 21-22 and by 9.7% to £7.49 for 18 to 20-year-olds.
Those aged 16 and 17 will see the hourly rate increase by 9.7% to £5.28.
When is the government raising it?
The measures are expected to come into place in April 2023.