If you have had the opportunity to read my previous blog post ‘Key Employment Law Changes’, you will be aware that from 1st April 2016, all employers are under a duty to comply with new obligations under the ‘National Living Wage’ regulations.
It is important that small business owners in particular are aware of the implications of this, to ensure that they implement any necessary pay increases and are not subject to later claims for arrears of wages owed.
By way of background, the National Living Wage was originally calculated based on the amount that employees would have to earn in order to cover basic living costs – prior to this month however, this was used as a benchmark/guidance only, and the rates were not legally enforceable.
From 1 April 2016, the National Living Wage became law under the National Minimum Wage (Amendment) Regulations 2016 for workers aged 25 and over, increasing the minimum wage by £0.50 to £7.20 per hour – the effect is therefore essentially that the National Minimum Wage rate is increased.
Please note – the National Minimum Wage rates will continue to apply for workers aged under 25.
If you are a business owner, you should therefore make arrangements to assess who within your organisation will be entitled to this increase, notify them accordingly and advise your accounts/payroll team to implement the rise.
Although the penalties for failure to implement the new rates are as yet unknown (updates to follow, I’m sure!), HMRC have intimated that they will take ‘firm action’ where employers are found to be in breach of the Regulations.
Going forward, the Government have further suggested that they will continue to increase the National Living Wage and estimate that this will rise to £9.00 per hour by 2020.
If you have any questions as to whether/how the National Living Wage could affect you/your business, please contact Katharine Kelly on 0151 239 1079 or firstname.lastname@example.org.