National Living Wage - Employers are you ready?

March 2016

On the 1st April 2016, the National Living Wage arrives for eligible workers aged 25 and over.  It has been set at £7.20 per hour.  For everyone under the age of 25, the National Minimum wage continues to apply.

All eligible employees – whether permanent workers, agency workers, casual labourers or agricultural workers – who are aged 25 or over, must be paid £7.20 per hour, a rise of 50p per hour from the current National Minimum Wage. That amounts to an estimated increase in earnings of £900 per year, for a full time worker currently receiving the National Minimum Wage.

The National Minimum Wage will continue to apply at £6.70/hour, to those aged between 21 – 24 years with the premium added only to those over 25 years.

Employers must remember however that the new National Living Wage is different from the ‘Living Wage’, which is an hourly rate of pay calculated to cover the basic cost of living in the UK.  It is assessed by the independent action group Living Wage Foundation and was recently calculated at £8.25 per hour, or £9.40 per hour in London.

Parrott & Coales’ Employment Expert Albert Bargery said, “Implementing the National Living Wage for eligible over 25’s should not be ignored or delayed. There are penalties in place and employers can be fined 200% of the amount owed if arrears are not paid within 14 days and could incur fines of up to £20,000 per worker.”

He added:  “Age-related practices that set out to reduce the number of employees eligible for the higher rate must definitely be avoided.  Any dismissals of older employees, even with less than two years’ service, could see employers facing an employment tribunal for unfair dismissal and age discrimination.  The same applies to recruitment, employers must avoid demonstrating any preferences for younger workers.”

The National Living Wage is expected to increase each year, with recommendations for future rises being made by the Low Pay Commission, as the Government continues its objective towards a ‘higher pay and higher productivity’ in place of ‘low wage, high welfare’ society.

Please contact Albert Bargery in our Employment Department for further information. 

 

Albert Bargery

Tel:  01296 318508

Em:  albertb@pandcllp.co.uk

 

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This is not legal advice; it is intended to provide information of general interest about current legal issues