A year on from the introduction of a new mandatory National Living Wage for workers aged 25 and above, rates of National Minimum Wage and National Living Wage have risen across all age brackets.
The new rate increases are as follows:
- The rate for workers aged 25 and over has increased by £0.30 to £7.50 per hour
- The rate for 21-24 year olds has increased by £0.10 to £7.05 per hour
- The rate for 18-20 year olds has increased by £0.05 to £5.60 per hour
- The rate for 16-17 year olds has increased by £0.05 to £4.05 per hour
- The rate for most apprentices under the age of 19 or in the first year of their apprenticeship has increased by £0.10 to £3.50 per hour.*
This is all part of the government’s 2015 target of phasing out the National Minimum Wage by 2020 and introducing a National Living Wage of £9 per hour to all workers aged 25 and above. The hourly rate is scheduled to change each year in April until it reaches this target.
National Minimum Wage or National Living Wage?
The differences between the National Minimum Wage and the National Living Wage can be confusing. This is often because the government’s new National Living Wage is mixed up with the Living Wage, a figure that is calculated annually according to the basic costs of living by the independent Living Wage Foundation. This Living Wage currently stands at £8.45 for the UK and £9.75 for London – a figure much higher than the government’s 2020 target.
Unlike the National Minimum Wage, the Living Wage isn’t enforceable by law. The government’s National Living Wage, however, is – mostly because it’s really just a new name for National Minimum Wage.
Penalties for not paying the National Living Wage are steep: 200% of the amount owed unless arrears are paid within 14 days and a maximum fine of £20,000 per worker for non-payment. Employers who fail to pay will be banned from being a company director for up to 15 years.
If you’ve got any questions about the National Minimum Wage, the National Living Wage, or any other employment issues, get in touch with our team.
* While apprentices aged under 19 or aged over and in the first year of their apprenticeships are eligible only for the £3.50 an hour rate, once they are reach the age of 19 or have completed the first year of their apprenticeship, they are eligible for the minimum wage rate for their age.