National Living Wage

There is much publicity and indeed confusion surrounding the introduction of the National Living Wage, which comes in to force on 1 April 2016.

However, as employers have for many years been used to the implementation of the National Minimum Wage the introduction of the National Living Wage should not be confusing. The National Living Wage should be considered another rate of the National Minimum Wage which applies to employees who are 25 years old and above.

The rate will be introduced on 1 April 2016 for all employees who are 25 years old and above and the hourly rate will be £7.20. You should ensure that you make plans now for staff who will be affected to ensure that they are being paid the correct rate when the changes are introduced. 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. Whilst the National Living Wage is introduced in April 2016 and will be reviewed each April, the application of the rate is on employees 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 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 hourly rates from 1st April 2016 will be;

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.