10 Things to Know About the UK National Living Wage 2016
Published 14 March 2016
The introduction of the living wage is just a couple of weeks away and it is worth taking a look at a few facts, the impact and a few predictions in relation to it.
The compulsory National Living Wage (NLW) will be introduced on 1 April, 2016, for all working people aged 25 and over, and will be set at £7.20 per hour.
The NLW is being introduced because there are more people in the UK on low pay compared to other advanced economies.
The current National Minimum Wage for those under the age of 25 will continue to apply.
The NLW will be enforced in the same way as the minimum wage is, meaning potential fines for employers who fail to pay it.
A predicted 2.7 million low wage workers will receive a cash boost by the changes, while a further 3.25 million people could also see an increase in wages as a result.
The NLW rate for employees aged over 25 will change on 1 April each year. Companies will be required to pay a minimum of £9 per hour by 2020.
By 2020, an individual aged over 25 working 35 hours a week and previously earning the minimum wage will see their gross wages increase by around a third compared to 2015-16, or £5,200 in cash terms.
The prospect of an increased wage bill could tempt employers to recruit only applicants under the age of 25. However, any temptation to do so should be discarded as discrimination law prevents a job applicant from being refused a post because of their age.
A report by recruitment group Manpower found employers are preparing to cut overtime pay and reduce rates paid for weekend working to claw back the extra cost of the new NLW.
There have been numerous warnings that the introduction of the NLW could lead to widespread job losses because businesses cannot afford to pay their staff. Chancellor George Osborne, however, predicts that 1.1million jobs will be created as a result, which would significantly outweigh the losses.