National Living Wage

What is the National Living Wage?

The idea behind the National Living Wage is that it is high enough for workers to have a ‘normal’ standard of living.

By 2020 the National Living Wage will increase to £9 an hour, replacing the £6.50 minimum wage. Whilst there is an obvious benefit for millions of people, critics say it could also cost thousands of jobs.

How much is the National Living Wage?

It’s being introduced in stages.

It will be £7.20 an hour from April 2016, with the figure rising to £9 by 2020.

Will it be for all low paid workers?

No, it’s only for over-25s.

It will effectively replace the existing minimum wage for them.

How much extra is the National Living Wage?

The National Living Wage is only applicable for employees who are over 25. For these employees their National Minimum Wage will be increased by 70p an hour more than the current rate and 50p an hour more compared to the planned October 2015 increase.

Annually, by 2020, someone aged over 25 working 35 hours a week and previously earning October’s minimum wage of £6.70 will see their wages go up by around £4,000 a year.

What happens for employees under25?

The change won’t affect people aged 24 and under currently on the minimum wage.

The national minimum wage is £6.50 (at October 2015) and applies to everyone aged 21 and over.

For 18-20 year olds’ the current rate is £5.30 per hour (an increase of 17p per hour pre 1 October 2015)

The rate for 16 to 17 year olds will increase 8p to £3.87 per hour.

For those who are on an official apprenticeship scheme, the National Minimum Wage for them is now £3.30 per hour (This rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age)

The real national living wage?

There is already an advised “Living Wage” but it’s up to employers to decide if they want to pay it or not.

The current Living Wage for London is £9.15 an hour which is lower than what the Government says its National Living Wage will be by 2020. For the rest of the country the rate is £7.85 an hour, which is more than what was proposed in the Budget.