The National Living Wage
As of 1 April 2020, all workers, who are 25 years and over, are legally entitled to earn at least £8.72 per hour. Further rises are planned over the next few years.
Make sure you are ready by working through the following four steps:
- Check you know who is eligible: All ‘workers’ are eligible and an individual is generally classed as a ‘worker’ if
- they have a written or verbal contract or other arrangement to do work or services personally for a reward
- their reward is money or a benefit in kind e.g. the promise of a contract or future work
- Take the appropriate payroll action i.e. adjust up to £8.72 where necessary
- Let your staff know about their new pay rate
- Check your staff under 25 are earning at least the right rate of National Minimum Wage (NMW) as outlined in the table below.
The Living Wage, the National Living Wage (NLW) and the National Minimum Wage (NMW) – what’s the difference?
NLW is simply the name the Government has chosen to give to a new rate of the NMW for workers aged 25 and over. So currently there are five NMW rates:
|New ‘NLW’ rate: applying to workers aged 25 or over, except where the apprenticeship rate applies:
|Younger adult rate: applying to workers aged 21 to 24, except where the apprenticeship rate applies:
| rate: applying to workers aged between 18 and 20 inclusive, except where the apprenticeship rate applies:
|Young workers rate: applying to workers aged under 18 but above the compulsory school age and who are not apprentices:
|Apprenticeship rate: applying to apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship:
The NLW should not be confused with the voluntary ‘living wage’ rate calculated independently of the Government by the Living Wage Foundation to reflect the basic cost of living in the UK (currently £10.85 an hour in London).
If you feel additional personalised guidance would be useful, contact the Human Resources team by e: email@example.com or through the HR helpline on 020 7932 1200.
You can find out everything you need to know about the current National Living Wage (NLW), including National Minimum Wage and current rates of pay at www.gov.uk.
Useful information and assistance is also available on the ACAS page.
For further information on who constitutes a ‘Worker’ go to this Government advice page.