As of 1st April the Government’s new National Living Wage will become law. As an employer, you’ll need to make sure you’re paying your staff correctly, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.
If you have staff working and aged 25 or over and not in the first year of an apprenticeship, they'll be legally entitled to at least £7.20 per hour. That’s an extra fifty pence per hour in their pocket. The Government is committed to increasing this every year and it’s projected to rise to at least £9 per hour by 2020.
Generally all those who are covered by the National Minimum Wage, and are 25 years old and over, will be covered by the National Living Wage these include:
• most workers and agency workers
• casual labourers
• agricultural workers
• apprentices who are aged 25 and over.
A survey conducted in November 2015 by the Resolution Foundation and the Chartered Institute of Personnel and Development revealed that the policy is expected to have its greatest impact in the retail, hospitality and healthcare sectors. The policy has received criticism from some large employers, particularly supermarkets and the food and drink sector, where profits may be reduced by up to 10%. Some large employers have said that they may pass on the additional cost to consumers in the form of higher prices and some intend to improve productivity.
Employers need to prepare for the changes and ensure they are paying the new rates. Employees will also expect to know how their pay is changing. Don't forget that failure to pay the correct rate could lead to a penalty charge of up to £20,000 for each member of staff underpaid. Take these four steps to be ready for the change:
• Check you know who is eligible in your organisation.
• Take the appropriate payroll action.
• Let your staff know about their new pay rate.
• Check your staff under 25 are earning at least the right rate of National Minimum Wage.
The National Living Wage should not be confused with the Living Wage, as set by the Living Wage Foundation (http://www.livingwage.org.uk). The National Living Wage is a compulsory rate - the Living Wage is not. The Living Wage is a voluntary rate of pay which is promoted by the Living Wage Foundation to reflect what has been assessed as the rate a worker needs to be paid to cover the basic cost of living. Currently the Living Wage rates are £9.40/hr for London, and £8.25/hr for the rest of the UK.