It’s Now in Force! The National Living Wage – Ensure your payroll is correct for April 2016

The National Living Wage is now in force and has been since 1 April 2016. Employers need to take action as the new rate is compulsory and must be implemented for all affected employees as from 1 April 2016.
Failure to pay the new rate could result in penalties of £20,000 for each and every employee underpaid should you fail to take action.
There is much publicity and indeed confusion surrounding the introduction of the National Living Wage, which comes in to force on 1 April 2016.
As well as ensuring that you apply the rate to anyone who is 25 years or above at the present time, you should also implement a review date for all staff under the age of 25 so that you review their pay prior to their 25th birthday to ensure compliance with the new rate.
The application of the rate is on an employee’s 25th birthday (for those not already eligible when the changes are introduced on 1 April 2016).
You should also ensure that you log a review date for any changes to the National Living Wage which will be reviewed each year and any increases will be implemented on 1st April each year, as opposed to 1st October changes for the National Minimum Wage.
The easiest way to deal with the changes is to view the rate as an additional National Minimum Wage bracket. The hourly rates from 1st April 2016 are;

Employee 25 years and above £7.20
Employee 21-24 years £6.70
Employee 18-20 years £5.30
Employee under 18 years £3.87
Apprentice £3.30 (if under 19 years or within their 1st year of the apprenticeship)

Payment for any benefits in kind, vouchers or stamps, tips/gratuities or allowances/overtime premiums cannot be considered when calculating if you are paying staff the National Living Wage.

At CH Legal, our employment team can help you ensure you comply with all relevant regulations, contact caroline.tomlinson@ch-legal.co.uk or call 0161 745 9170 for more information.