On 1 April 2016, the Government’s new National Living Wage will come into force. What’s the effect for employers?
What is the National Living Wage?
The National Living Wage has been around for some years already but was not a legally enforceable minimum level of pay. It was calculated to be the amount an individual needs to earn to cover the basic costs of living.
From 1 April 2016 it will become law under the National Minimum Wage (Amendment) Regulations 2016, effectively enhancing the National Minimum Wage Rates.
From 1 April 2016 all employees aged 25 and over will be legally entitled to be paid at least £7.20 per hour.
Three Steps to be ready for the change
If employers have not done so already, there are a few steps they should take now, to be ready for the change:
- Check the age and hourly pay rate of all staff.
- Ensure that all staff aged 25 or older on 1 April 2016 are paid £7.20 an hour from that date.
- Let any affected staff know about their new pay rate.
Don’t forget that the National Minimum Wage still applies to staff aged under 25 – and when they reach their 25th birthday, the National Living Wage will then apply instead.
What’s included in the rate?
The amounts stated for both the National Minimum Wage and the National Living Wage are the gross pay – not the amount the employee takes home after deductions of tax, NI, etc.
If you don’t comply…
HMRC will have responsibility for enforcing the new National Living Wage (as well as the National Minimum Wage). They will investigate complaints that the living wage has not been paid and have indicated that they will enforce it as strongly as they have National Minimum Wage.
More information can be found on the government’s dedicated National Living Wage website.
National Minimum Wage rates are published on the GOV.UK website.