The National Living Wage (NLW) is a legal requirement, and is in effect a rise on the minimum wage.
The NLW will be introduced on 1 April for all working people aged 25 and over, and will be set at £7.20 per hour. The current National Minimum Wage (NMW) for those under the age of 25 will continue to apply. As an employer, you will need to make sure you are paying staff correctly. Your nursery could be named and shamed on gov.uk if this doesn’t happen, and fined (see below).
Key points
HM Revenue & Customs can take employers to court for not paying the NLW.
The NLW is the new national rate set for people aged 25 and over.
The NMW rates for those aged under 25 change on 1 October every year, while the NLW rate for those aged 25 and over will change every year on 1 April.
Who will be entitled to the National Living Wage?
All those who are covered by the NMW, and are aged 25 years and over, will be covered by the NLW. These include:
- employees
- agency workers
- casual labourers
- apprentices
Penalties for failure to comply
The penalty for non-payment of the NLW will be 200% of the amount owed, unless the arrears are paid within 14 days.
The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.
Who sets the NLW rate?
The Low Pay Commission, which currently recommends the level of the NMW, will recommend any future rises to the NLW.
The Living Wage
The new NLW is different from the Living Wage. The Living Wage is stated independently by the Living Wage Foundation and is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis. The NLW is currently lower than the Living Wage, but it is compulsory.