Resources

National living wage

22 September 2015

On 8 July 2015, the Chancellor of the Exchequer announced the introduction of a new National Living Wage (“NLW”).

The Government wishes to ensure a higher wage for more experienced workers. The NLW is a premium on top of the National Minimum Wage (“NMW”) for workers aged 25 and over.

The first premium will be set at 50p in April 2016, which will increase the total NLW to £7.20 per hour.

The NLW will come within the remit of the Low Pay Commission which will make annual recommendations in the same way as it does so concerning the NMW.

On 1 September 2015, the Department of Business Innovations and Skills announced various measures to help enforce compliance with the NLW (and NMW). These include:

  • Doubling the penalties for breach of the NMW and NLW from 100% to 200% of arrears of pay. The penalty would be halved if the employer pays within 14 days. The maximum penalty will remain at £20,000 per worker.
  • Disqualification from being a company director for up to 15 years. - Establishing a new HMRC department dedicated to pursuing the worst offenders.
  • Consulting on the introduction of a new offence of aggravated breach of labour market legislation.

BIS also proposes to improve guidance for employers and to work with payroll providers to ensure that payroll systems ensure compliance, although it is not yet clear how this may be achieved.

In the run up to April 2016, Schools should review the remuneration of junior staff, casuals and utility staff, to ensure that their pay meets the new requirement and continues to do so as the premium increases, probably on an annual basis.