National Living Wage (NLW) introduced today
From 1 April 2016, a new compulsory national living wage (NLW) of £7.20 an hour applies to workers aged 25 or over (provided they are not in the first year of an apprenticeship). At least 1.5 million people will get a pay rise.
The government plans to increase the rate to £9 an hour by 2020. For more information on who is eligible is available via the Gov.uk website.
A calculator for the National Minimum Wage and National Living Wage is available here.
The National Minimum Wage rates are upgraded in October each year with National Living Wage in April of each year. These are the current rates:
National Minimum Wage Rates 2015 / 2016
| Age | Minimum Rate (per hour) |
| Over 25 (NLW) | £7.20 |
| 21-25 | £6.70 |
| 18-20 | £5.30 |
| 16-17 | £3.87 |
| Apprentices | £3.30 |
Current Market Research
A CIPD survey revealed that 8 per cent of employers are planning to take on more workers under the age of 25 to avoid paying the higher wage, while a petition from staff at a DIY business has accused them of cutting pay on Sundays and bank holidays to offset the costs of NLW.
Analysis from the Resolution Foundation suggests that as a result of the introduction of the NLW, throughout GB the lowest paid will receive a wage increase of over 10%. The research suggests that around half of all employees who are set to benefit work in industries where the resulting wage bill increase will be just 0.6 per cent or less (education, health, manufacturing, construction) though for industries such as hospitality, retail and support services there will be a significantly larger impact.
What penalties will employers face if they don't pay the NLW?
From 1 April, penalties for non-payment of the NLW will be doubled, from 100% of the money owed, to 200%. A new compliance team is being established within HMRC to investigate the most serious cases of non payment. Employers found guilty can be disqualified as a company director for up to 15 years.
The overall maximum penalty will remain at £20,000 per worker.
If you would like further information about NLW or to discuss how it's impacting your business please contact our HR Advisory or Tax Advisory teams.
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