National Living Wage

March 31, 2016

On April 1st, the Government’s new National Living Wage (NLW) becomes law. The move effectively provides an uplift to the National Minimum Wage (NMW) for over-25s - this group will find their hourly rates increasing from £6.70 to £7.20 whilst under-25s will still be entitled to the existing £6.70.

 

The increased rate is expected to provide a pay rise to around 1.3 million UK workers, according to the Office for Budget Responsibility, and is part of the government's drive to ensure that "work pays", in a move towards a higher-wage/lower benefits society.

 

The Living Wage Foundation, which sets an independent and voluntary 'Living Wage' of it's own, was reported to be pleased with the chancellor's announcement but expressed concerns that any National Living Wage increases will still lag beneath what they consider to be an acceptable rate.

 

The CBI and British Retail consortium both expressed concerns that companies would be forced to cut hours or jobs in order to fund the increased costs in wages, whilst there remains the spectre of less scrupulous employers attempting to circumvent the rules entirely (with around 5000 employers having been investigated and found to be under-paying in the last 5 years).

 

Well aware of the latter, the government also updated their measures to ensure compliance from 1st April, with penalties for non-payment being doubled, from 100% of the money owed, to 200%. Employers found guilty can be disqualified from being company directors for up to 15 years and the maximum penalty will remain at £20,000 per worker. 

 

FPS takes compliance with all legislation extremely seriously and the Living Wage is no exception. We monitor our payrolls to ensure that all workers receive the correct amounts due and that nobody falls below the NMW or NLW. Get in touch with us today to see how we can help your business.

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