National Living Wage introduced

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The mandatory National Living Wage comes into effect today (1 April 2016).

All workers aged 25 and over, who are not in their first year of an apprenticeship, are now legally entitled to at least £7.20 an hour – a rise of 50p relative to the current National Minimum Wage rate. This rate will increase year-on-year. 

The minimum wage rates from 1 April including the National Living Wage will be:

  • £7.20 per hour for those aged 25 and above
  • £6.70 per hour for those aged 21 to 24
  • £5.30 per hour for 18 to 20 year olds
  • £3.87 per hour for 16-17 year olds
  • £3.30 per hour for an apprentice

The accommodation offset rate is £5.35.

Paying workers correctly and in compliance with the law is crucial. Employers who fail to pay workers at least the correct minimum wage risk being publicly named and shamed, facing a financial penalty and may even be prosecuted.

The government has announced that the enforcement budget for the National Minimum Wage and Living Wage will be increased in 2016 and 2017. Employers who fail to pay staff at least the minimum wage they are legally entitled to will have to pay double the current penalties.

This reform is intended to increase compliance and make sure those who break the law face tough consequences. The calculation of penalties on those who do not comply will rise from 100% of arrears to 200%. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.

The Gangmasters Licensing Authority will also assess whether workers are being paid the National Living Wage in the same way it currently assesses the payment of the National Minimum Wage

The Living Wage introduces a new age bracket to wage rates, but only employing or seeking to employ workers under 25 is not an option as it risks breaking age discrimination laws. 

Employers should have prepared for the introduction of the National Living Wage by taking the following four steps:

  • Check you know who is eligible in your organisation. Find out more information on the Gov.UK’s employment status page
  • Update your payroll for each worker to ensure you are paying the correct amount
  • Let your staff know about their new pay rate in writing
  • Check that workers under 25 are earning at least the right rate of National Minimum Wage.

If you are unsure about what your legal obligations in relation to pay are, please contact NFU CallFirst on 0370 845 8458. Further information about National Minimum Wage rates can be found on the Gov.UK website.

  • Posted by: A SearbyPosted on: 31/03/2016 23:04:36

    Comment: If raising rates to £7.20 is good, surely £100 per hour is better ? With current level of commodity prices it leaves us with sarcastic outlooks
  • Posted by: Chris JeffriesPosted on: 02/04/2016 12:47:25

    Comment: When one realises that the "living wage" for a 40 hour week equates to less than £15,000 a year for the full-time employee from which tax and NI will be deducted it's about time that those at the bottom of the heap had a leg up. Trouble is that the industries locked into paying low wages, like farming, have about zero opportunity to pass the additional cost on. The fact is that the farm business owner ends up carrying the can - again! I wonder what would happen if I tell my customers that I have to impose a 7% levy on my sales to cover this regulatory cost. I notice my insurers have passed on the increased Tax levied on them.