The National Living Wage was introduced in 2016, a rebranded version of the National Minimum Wage for the over 25’s. This set hourly rate is the minimum amount an employer can pay a worker (aged 25 or over) who works in the United Kingdom. The scheme was introduced in 2016 to rebalance and align the minimum hourly pay rate with the UK average salary of a person aged 25 and over. To date, it is thought to have benefited over 4.5 million UK workers.

 

Who is eligible?

The National Living Wage is not available to every UK worker, currently to qualify a worker must:

  • Be at least 25 years old
  • Not be currently working as an apprentice

Under 25’s and those currently employed as an apprentice are governed by separate legislation and rates.

 

Current minimum rates

Since April 2016 the government have incrementally increased the hourly rate year on year to reach their April 2020 target. The current minimum pay rates are as follows:

 

Year

25 and over

21 to 24

18 to 20

Under 18

Apprentice

2019 – 2020

£8.21

£7.70

£6.15

£4.35

£3.90

2018 - 2019

£7.83

£7.38

£5.90

£4.20

£3.70

2017 - 2018

£7.50

£7.05

£5.60

£4.05

£3.50

2016 to 2017

£7.20

£6.95

£5.55

£4.00

£3.40

 

From April 2020

As of April 2020, the National Living Wage will see its biggest increase to date, 6.2%. This will see those earning the national minimum see a pay increase which is stated as being four times the rate of inflation.

Although positive for workers, an increase of this nature must be considered by organisations that are currently employing lowly paid workers. The change in rates is enforceable as of April 2020, the increase will see full-time workers paid an additional £930 per year, a cost which organisations will need to factor into overheads, cash flow and business planning.

 

From April 2020 the minimum pay rates are as follows:

 

Year

25 and over

21 to 24

18 to 20

Under 18

Apprentice

2020 - 2021

£8.72

£8.20

£6.45

£4.55

£4.15

Change from 2019

+£0.51

+£0.50

+£0.30

+£0.20

+£0.25

Change per annum for a full-time worker*

£928.20

£910.00

£546.00

£364.00

£455

 

What are the penalties?

At present the penalty for not paying a worker the National Living Wage is set at a maximum fine of £20,000 per work. In addition, employers who fail to pay can also be named publicly and banned from being a company director for up to 15 years.

 

If you are concerned about how these changes may affect you or your business or if you would like further information, please do not hesitate to contact us on 0203 019 4990 or email us at info@bishopsgatepay.co.uk.

 

*We have calculated a full-time to be a person working 35 hours per week.