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National Living Wage - Frequently asked questions and answers

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1. When do I need to worry about it?

It will be compulsory for all employers from 1 April 2016.

2. Who should I pay the new rate to?

It only applies to employees aged over 25 years old. Younger employees will still receive the National Minimum Wage which is currently as follows:

Age NMW Rate (per hour)
21–25 £6.70
18-21 £5.30
18  £3.87
Apprentices £3.30

 

3. How much should I pay?

Employees who are eligible to receive the National Living Wage should be paid £7.20 per hour from 1 April 2016.

4. How will this affect me as an employer?

You should avoid hiring employees solely on the basis that they are under the age of 25 and therefore can be paid a lower wage. Employers should avoid age discrimination when recruiting and managing staff.

You should also remember that the National Living Wage will increase to £9 per hour in 2020.

Although the introduction of the National Living Wage is intended to assist younger workers and boost wages, it is questionable whether it is really a ‘Living Wage’. Everyone is waiting to see the impact on our economy, and whether or not it will adversely affect businesses.

Whilst it will not be obligatory to do so, there is some expectation that those currently earning more than the National Living Wage might expect their pay to increase also, given the gap between them and lower paid employees will reduce. If so, this could have a significant impact on employers, leading to much higher employment costs.

If you need advice on the National Living Wage, or any other employment issue, please contact our Employment Team who will be happy to assist.

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