The ‘ National Living Wage’…Don’t get caught out!Feb. 3, 2016, 3:40pm
From April 2016, the government will introduce a new mandatory national living wage (NLW) for workers aged 25 and above.
Initially set at £7.20 – a rise of 50p relative to the current National Minimum Wage (NMW) rate. That’s a £910 per annum increase in earnings for a full-time worker on the current NMW!
The adult NMW rate is currently £6.70. From 1 April 2016 the premium will come into effect on top of the NMW, taking the national living wage to £7.20. The NMW will continue to apply for those aged 21 to 24, with the premium added on top for those aged 25 and over, taking the total hourly rate to the national living wage.
The National Living Wage along with Auto Enrolment, are the legislation changes that are likely to have a significant financial impact on employers this year.
It is therefore crucially important for business owners to prepare for the changes.
The National Living Wage means that many employees will see at least a 50 pence per hour increase to their wages, however this will in turn mean a higher wage bill for the employer and it also may have an impact on pension contributions and who is eligible.
With effect from 1 April 2016 every employer will need to make sure that they are paying any employees that are aged 25 or over and not in the first year of an apprenticeship, at least £7.20 per hour. Any employee below 25 years of age should be earning at least their age appropriate National Minimum Wage rate.
Implementing the National Living Wage is not optional. It is the law and will be enforced as strongly as the current National Minimum Wage and by that we mean back pay, fines, prosecution, naming and shaming, etc.
Employers should also consider that the Government have made a promise to increase the figure every year, which means we may see the first increase as soon as this October.