National Living Wage

03 Sep National Living Wage

As part of the Summer Budget measures, the Chancellor announced the creation of a new National Living Wage from April 2016. A recent policy paper published by The Department for Business, Innovation & Skills (BIS) has now provided more detail about its introduction.

The National Living Wage will initially be set at £7.20 per hour for the over 25’s. Separately, the National Minimum Wage which is currently £6.50 and will increase to £6.70 with effect from 1 October 2015 for adults aged 21 years and older. This is a rise of 3%. The rates for 18-20 year olds will increase to £5.30 (a rise of 17p) and the rate for workers above the school leaving age but under 18 will increase to £3.87 (a rise of 8p) also from 1 October 2015.

From April 2016 the National Living Wage premium will come into effect on top of the NMW for the over 25's. This represents a rise of 70p relative to the current NMW rate, and 50p above the increase coming into force in October. The NMW will continue to apply for those aged under 25.

The Government is also working with the Low Pay Commission (LPC) to ensure that the National Living Wage increases to £9 per hour by 2020 in order to achieve the Government’s objective of reaching 60% of median earnings. The LPC will also continue to advise the Government on the NMW rates.

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