National Minimum Wage And National Living Wage Changes 2020

Are you aware that there are changes to the national minimum wage and national living wage taking place on April 1st 2020? No? Let us tell you everything that you need to know.

 

In a bid to show the working classes that the government is taking their concerns seriously, there have been huge changes made. “Hard work should always pay, but for too long, people haven’t seen the pay rises they deserve,” said Prime Minister Boris Johnson. This comes after recommendation of pay elevation from the Low Pay Commission (LPC).

 

What’s the difference between national living wage and national minimum wage?

The national minimum wage is an amount set by the government dependant on your age and whether you’re an apprentice. If you’re over the school leaving age – currently 16 years old – then you are entitled to the current minimum wage. Of course, there are some exceptions where this doesn’t apply:

  • If you’re self-employed running your own business
  • A company director
  • A volunteer or voluntary worker
  • If you’re a family member of the employer living in the employer’s home

The national living wage came into practice in 2016. The Living Wage, sometimes referred to as the ‘Real’ Living Wage is an hourly rate based on the basic cost of living in the UK. The living wage is an informal benchmark, not a legally enforceable minimum level of pay, like the national minimum wage. It’s calculated by the Living Wage Foundation, a campaigning organisation in the UK, and therefore has no legal grounding. The Living Wage for the UK is set at a recommended £9 per hour and for London at a recommended £10.55 per hour. The basic idea is that these are the minimum pay rates needed to let workers lead a decent life.

 

The new rates are as follows:

£8.72 per hour – 25 years old and over

£8.20 per hour – 21-24 years old

£6.45 per hour – 18-20 years old

£4.55 per hour – 16-17 years old

£4.15 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

 

It is a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage.  Penalties for failure to comply with the National Living Wage. 

  • With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.
  • The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

 

If you have any questions regarding rates of pay and payroll, feel free to contact Jane Gilbert, our head of payroll on jane@nordens.co.uk or call in on 02085300720

 

 
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