What is the National Living Wage?
A living wage is the hourly amount workers should be paid in order for them to be able to afford basic living necessities such as rent, healthy food and travel.
The living wage was first introduced in 2001 but paying it was voluntary. An independent study found that 80 per cent of employers that paid their staff the voluntary living wage experienced an enhanced quality of work and a 25 per cent reduction of absenteeism.
What is the change?
From April 2016 the National Living Wage (NLW) will no longer be voluntary. Employers will be legally required to pay their workers who are at least 25 years old, £7.20 per hour. Workers under the age of 25 will earn the National Minimum Wage (NMW), which is currently set at £6.70 per hour for workers aged between 21 - 24 years of age.
The NLW will increase, with a projected target of at least £9 per hour by 2020. Employers who fail to pay their workers the appropriate amounts could face tough penalties such as a maximum fine of £20,000 per underpaid worker. The Department of Business Innovation & Skills has also stated that anyone found guilty could be considered for disqualification from being a company director for up to 15 years.
More information on the NLW can be found here.
Source: Zywave 2015: Regulatory update The New National Living Wage
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