3 July 2016

Is Your Business Ready for the National Living Wage?

The Government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and over from 1 April 2016.

The National Living Wage, initially set at £7.20, constitutes a rise of 50p relative to the current National Minimum Wage (NMW) rate of £6.70. This works out as an annual increase of £910 in earnings for a full-time worker who is currently on the National Minimum Wage.

The National Minimum Wage will continue to apply to anyone under the age of 25, with the premium added on top only for those aged 25 and over to take their total hourly rate to the National Living Wage.

Age Wage
25 and over  £7.20           
21 to 24  £6.70
18 to 20 £5.30
Under 18 £3.87
Apprentice* £3.30

*This rate is for apprentices aged 16 to 18 and those aged 19 or over who are in the first year of their apprenticeship. All other apprentices are entitled to the National Minimum Wage for their age.

Failure to pay eligible workers the correct amount could result in a penalty of 200% of the amount owed, up to a maximum of £20,000 per worker, unless the outstanding amount is paid within 14 days of receiving a notice from HM Revenue and Customs (HMRC). Employers who fail to pay the National Living Wage could also be banned from being a company director for up to 15 years.

You can read more about the National Living Wage on the Department for Business and Skills website.