From April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 70p relative to the current National Minimum Wage (NMW) rate, and 50p above the increase coming into force in October. That’s a £1,200 per annum increase in earnings for a full-time worker on the current NMW.
The adult NMW rate is currently £6.50. It will increase to £6.70 from October 2015. From April 2016 the premium will come into effect on top of the NMW, taking the National Living Wage to £7.20. The NMW will continue to apply for those aged 21+, with the premium added on top for more experienced workers taking the total hourly rate to the National Living Wage.
The government wants to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.
The Department for Business (BIS) has published a policy paper about the National Living Wage (NLW). The paper explains what the NLW is and who it will apply to. The Low Pay Commission (LPC) has also launched a consultation about National Minimum Wage (NMW) rates and the introduction of the NLW.
The LPC is particularly interested in hearing from employers in low-paying sectors such as retail, hospitality, social care, cleaning and hairdressing. The consultation closes on 25th September 2015.
If you think that your small business could be affected you can get in touch with LPC direct.
Make sure you make your changes to payroll in October for the new NMW rates.
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