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National Living Wage Set to Become Law in the UK on Friday

March 30, 2016
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2 Min Read
National Living Wage Set to Become Law in the UK on Friday

Over a million low-paid workers in the U.K. could to see their paychecks increase as the new National Living Wage (NLW) becomes law on Friday.

From April 1, employers will be required by law to pay employees who are 25 and older a minimum hourly rate of £7.20 ($10.40) an hour, rising to at least £9.00 ($14.50) an hour by 2020.

The new NLW was announced by the Chancellor of the Exchequer, George Osborne in the U.K. 2015 summer budget which would give people currently receiving the national minimum wage a estimated £5,000 ($7,200) pay increase by the end of the decade.

An independent study revealed that one in three workers in some parts of the U.K. could benefit from the new NLW, with one in six workers, or 4.5 million seeing a pay increase from Friday.

Prior to April 1, employers had to pay employees who were 25 and older the National Minimum Wage (NMW) of £6.70 ($9.40) an hour.

The NMW will remain in force for the under 25’s at the following hourly rates: 21 – 24, £6.70 ($9.64,) 18 – 20, £5.30 ($7.63,) under 18’s, £3.70 ($5.33) and Apprentices £3.30 ($4.75)

“The national living wage is a hugely ambitious policy with the potential to transform Britain’s low pay landscape,” Torsten Bell, director of the Resolution Foundation, said.

“Up to a third of workers will get a pay rise in national living wage hotspots,” He added.

According to Sky News, the biggest city for employees to see a gain is Sheffield in South Yorkshire, where a fifth will receive a pay rise under the new NLW legislation.

In a separate initiative, the U.K. Living Wage Foundation has created a “voluntary” living wage with hourly rates of £9.40 ($13.60) for people working in London and £8.25 ($11.90) for the rest of the U.K.

Although employers are not obliged to pay their low-paid employees the ‘living wage’, over 2,300 organizations have chosen to do so such as Google, HSBC, Barclays Banks, Save the Children and KPMG.

From April 1, the penalties for non-payment of the NLW are 200 percent of any monies owed to employess. Employers found guilty can be disqualified as a company director for up to 15 years.

The maximum penalty for employers for not paying the NLW is £20,000 ($28,800) per employee.

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