Use our COVID-19 resources to better manage the crisis and feel like you are on the front foot View Resources

The New National Living Wage

Back in the July 2015 Budget, one of the main talking points affecting UK businesses was the introduction of the new “National Living Wage”.  Welcomed by many, some small business owners question what level of impact the new compulsory legislation will have on their organisations.

What is it?

Over the last few years we have become very familiar with the National Minimum Wage introduced in 1999 and currently set at £6.50 per hour for those workers over 21, £5.13 for those aged 18 to 20 and £3.79 for under 18’s (separate levels are set for Apprentices). As of April next year, the new National Living Wage will come into force and in effect is a premium on top of the existing National Minimum Wage for workers aged 25 and over. The new pay level will initially be set at £7.20 per hour, rising to around £9 per hour by 2020. In its simplest terms, it creates a 5th tier of National Minimum Wage.

This new National Living Wage is of course not to be confused with the “Living Wage” which many businesses have subscribed to voluntarily over the last decade through the Living Wage Foundation and currently pay a minimum of £9.15 per hour in London and £7.85 per hour outside of London. Whilst that is voluntary, the new legislation is compulsory for all employers in the UK.

Effect on small businesses

It is likely that smaller businesses with a high proportion of employees on minimum wage are the ones that will feel the financial and operational impact the most. 

One of the biggest issues that employers need to face up to is looking in detail at their staff composition and ensuring that they are compliant with the new legislation. As well as taking into account age and contracted hours worked, employers need to ensure that other elements don’t take a worker under their statutory pay level, such as overtime and salary sacrifice. This must be reviewed for each pay period. Those businesses that currently pay their employees the voluntary “Living Wage” must not assume that they are compliant with the new legislation when it comes into effect.

The introduction of the National Living Wage is obviously good news for those employees who will see their pay increase and it is hoped there will be a positive impact on employee performance and reduced absenteeism as workers feel better financially rewarded for their efforts.

Act now

Although the change does not come into effect until April next year, it is important that businesses start thinking about the impact now and plan their budgets to take into account any potential wage bill increase. As with the existing National Minimum Wage, there is no doubt that the authorities will come down hard on anyone found to be non-compliant.

 

Back to News Listing

Need help quickly?

There's a great deal to manage right now - the Furlough Scheme, returning to work safely. Lean on us for helpful guidance. Book a call (it's free) with one of our HR or health & safety experts.

We will process your data in accordance with our Privacy Policy. You may withdraw this consent at any time by updating your preferences.  We make this easy for you by placing a link to your preferences in the footer of every email we send you.

COVID-19 Resources

How to Apply for a grant through the Kickstart Scheme Latest Updates for Working safely during coronavirus (COVID-19) COVID Outbreak Management Policy Fair Redundancy Process Checklist Guide to Creating a COVID Secure Workplace How to manage the holiday season and reduce the risk of losing staff to self-quarantine Cleaning regimes required for a COVID-19 secure workplace Guidance on Face Coverings in Retail and Shops JULY 24TH Summary of Recent Government Updates Kick Start the Economy Government Announcement Updated guidance for outdoor pools indoor gyms, pools and leisure centres Guidance for the Re-opening of businesses and venues from 11 and 13 July Updated Guidance for Working Safely

Five steps to working safely - display the poster to demonstrate you have followed the guidance Changes To Social Distancing At Work from 4th July 2020 Updated Advice: Coronavirus Job Retention Scheme Step By Step Guide for Employers 7 Traps to Avoid When Making Redundancies During Furlough Redundancy During Furlough Easing of Lockdown for Business but does it apply to you? Changes to the Coronavirus Job Retention Scheme - 10th June 2020 Return to Work Safely FAQs Planning Your Return to Work Top Tips to Prepare your Managers Legionella Risks During the Coronavirus Pandemic Coronavirus-related Statutory Sick Pay Rebate Scheme A List of Helpful Returning to Work Safely Resources Coronavirus Job Retention Scheme extended to end of October 2020 VAT on PPE is now ZERO Managers Top Ten Health & Safety Tips Return to Work Safely Toolkit Managing Emotions when we go back to Work Communications Matrix Top Tips for Mental Wellness Keeping in Touch With Furloughed Workers Manager's Guide to Furlough Leave and Wellbeing Staff Survey - Winning on Furlough Webinar: Working from Home and Winning Social Distancing in the Construction Industry Is your PPE Legal and does it do what it claims? Extension of First Aid qualifications 8 Helpful Tips To Promote Home Worker Wellbeing Free Staff Survey: Working From Home and Winning Maintain Safe Working Conditions COVID-19 HR and H&S Management Checklist COVID-19 Staff Announcement Building Entrance COVID-19 Sign Coronavirus and Home Working Guide
Park City Call Back

We will respond to your call back within 24 hours during business working hours

Please enter your name
×
Ask a question and get FREE advice

Juliet Price is the Managing Director here at Park City and has extensive, specialist knowledge in HR, Health & Safety and staff development. Enter your question below and we'll be back in touch soon with an answer!

Please enter your name
 
Please enter your telephone number
Please enter your question
×
Discover how your people truly feel

Dig deeper into underlying issues, spot opportunities, take action and track progress. Listen , review and take action with real-time reports. Download information about the WeThrive product toolbox, our recommended employee engagement solution.

Please enter your first name
 
Please enter your surname
Please enter your company name
Please enter your email address
Please enter your telephone number
×