National Minimum Wage and National Living Wage

There has been so much discussion recently regarding the implementation of a National Minimum wage which came into effect 1st April 2016. Details of these changes as follows:

These rates are for the National Living Wage and the National Minimum Wage from 1 April 2016.

• 25 & over £7.20
• 21 to 24 £6.70
• 18 to 20 £5.30
• Under 18 £3.87
• Apprentice £3.30

National Minimum Wage rates change every October. National Living Wage rates change every April.

https://www.gov.uk/national-minimum-wage-rates

It is likely to be popular with 1.3m workers over 25 who will benefit immediately, but several big employers have said it will hit their profits badly. The Office for Budget Responsibility (OBR) has also warned that 60,000 jobs will be lost as a direct result.

Not to be confused with either the National Minimum Wage - or the Living Wage - the NLW should boost the incomes of many of the UK’s most poorly-paid employees. The government will ask the Low Pay Commission, which currently recommends the level of the minimum wage, to suggest a figure for the National Living Wage in April 2017.

Mr Osborne said that there was an ambition that the National Living Wage should continue to increase to reach 60% of median earnings by 2020, subject to sustained economic growth. It is that calculation that leads to the aim for the National Living Wage to be more than £9 by 2020.

The wage hike is a “gamble” that risks putting politics into a system of setting a minimum wage, says the CBI business lobby group. It may also cause problems for some small businesses, it says.

Fashion chains, supermarkets and the hospitality sector are expecting to have to raise wages. The British Retail Consortium, which represents shops, has claimed that as many as 900,000 jobs could be lost in the sector, as a result of both the NLW and the Apprenticeship levy.

From 1 April, penalties for non-payment of the NLW will be doubled, from 100% of the money owed, to 200%. Employers found guilty can be disqualified as a company director for up to 15 years. The maximum penalty will remain at £20,000 per worker. A new enforcement team has also been set up at HM Revenue and Customs (HMRC) to pursue criminal prosecutions.