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The National Living and Minimum Wage



Posted: September 24th, 2015

With a lot of media focus on the upcoming introduction of the National Living Wage in April 2016, employers must not forget that the existing National Minimum Wage (NMW) will continue to increase in October annually, with the new hourly rates from 1 October 2015 as follows:

  • employees aged 21 and over will increase from £6.50 to £6.70
  • employees aged between 18-20 will increase from £5.13 to £5.30
  • employees aged between 16-17 will increase from £3.79 to £3.87
  • apprentices up to the age of 19, or in their first year of an apprenticeship, will increase from £2.73 to £3.30 

While the National Living Wage has been around for a little while, it has not been mandatory.  It has been seen more as an additional payment that employers can make to their employees at their own discretion. 

However, it was announced in the interim Summer Budget in July that the choice for employers to pay the living wage has been taken away.  From April 2016 it will be compulsory for employers to pay £7.20 per hour for employee’s aged 25 and over (an increase of 50p per hour to the new NMW rates.  Furthermore, it has also been proposed that the National Living Wage will increase to £9.00 per hour by 2020.

This increase will have quite an impact on staffing costs for employers.  In monetary terms, an employee working a basic 40 hour week, will have a pay rise of £1,040 per year.  Plus the added cost of Employer’s National Insurance of £143.52 per year, and for employers already operating a pension scheme the cost is higher still.

For advice on how you can manage the cost of employing staff in your business please contact us on 01228 711888. 

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