National Living Wage introduced

National Living Wage

National Living Wage comes into effect on 1 April

On Friday 1st April the National Living Wage comes into effect – a £7.20 an hour rate for workers aged 25 or over, allowing more than a million low-paid workers a pay rise. 

This compares favourably to the national minimum wage of £6.70 an hour for age 21 and over (£5.30 for those aged 18-20), though the new National Living Wage does not apply to those yet to reach 25 years old.

The measures were included in the Chancellor’s Budget in July 2015, and are intended to rise to £9 an hour by 2020.

But what about the Living Wage?
It’s worth pointing out that the Living Wage, a rate based on the cost of living and calculated by the Living Wage Foundation, is different from the Government-based National Living Wage, which is based on average earnings.

The Living Wage is not a legally enforceable level of pay, it’s more of a benchmark and a guide for firms.  Many companies already pay a voluntary living wage – usually £9.40/hour in London and £8.25/hour in the rest of the country.

However, some reports have suggested that some firms have put structures in place to make sure that they are able to afford the extra – balancing things like cutting back overtime and weekend rates against in-work benefits, share options and so on.

Do you know how much you earn?
New research has shown that a third of the lowest paid workers never check their payslips.

Stewart Gee of the conciliation service Acas said: “Eligible workers should check what they are entitled to under these new changes, and employers need to ensure that they are ready too.”

However, the National Living Wage is unlikely to apply if you’re self-employed, which now applies to 1 in 7 UK workers.

Research from the Social Market Foundation found that almost half of those who identify as self-employed in the UK (49%) were low-paid (if their income was stated as hourly) compared with 22% of employed people.

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