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National Living Wage

The National Living Wage came into effect on the 1st April 2016. Since April 2017 the relevant legislation requires employers to pay a minimum hourly rate of £7.50 to workers aged 25 years and above (previously £7.20 per hour).

The Government target is that the rate will increase to £9 per hour by 2020.

All workers are entitled to receive the National Living Wage from the age of 25 years, be they full time or part time workers.

It is important to note that the existence of the National Living Wage does not supersede the National Minimum Wage (see separate Factsheet on this). The National Minimum Wage continues to exist. Effectively the National Living Wage is simply a top-up for those workers aged 25 or over.

The rate of the National Minimum Wage is reviewed every year.

The rates from April 2017 are £7.05 for those aged 21-24, £5.60 for those aged 18 to 20, and £4.05 for those aged 16 and 17. The apprentice rate is £3.50.

The rates from October 2016 to April 2017 were £6.95 per hour for those aged 21 to 25 (at which point the National Living Wage will apply). For those aged 18-20 years old the rate was £5.55 per hour, and for 16 and 17 year olds the rate of £4.00 per hour. The apprentice rate was £3.40 per hour.

The Low Pay Commission will be responsible for recommending any changes to the amount of the National Living Wage.There are penalties for the failure to pay the National Living Wage. The penalty from the 1st April 2016 to employers will be to pay 200% of the money owed to the worker that failed to receive the National Living Wage (subject to a maximum penalty of £20,000). In addition, any employer that is found guilty of failing to pay may be disqualified as a company director for up to 15 years. An enforcement team has been set up within HM Revenue & Customs to pursue any criminal prosecutions in respect of the National Living Wage.    

 

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