Preparing for the National Living Wage

Preparing for the National Living Wage

You may have read a recent news item which highlighted the fact that close to six million workers in the UK are paid less than the Living Wage. Before you panic and worry that you will be at risk as an employer of domestic staff who is paying less than the Living Wage, you need to understand what the term actually means.

It is NOT the same as the National Minimum Wage, which IS a legal requirement. This is the figure set by the UK government, regularly updated, and is precisely what it says, the legal minimum an employer must pay their employees. It stands at £6.70 an hour for adults aged 21 and over and £5.30 for those aged 18 to 20.

The Living Wage is promoted by the Living Wage Foundation, which aims to promote its own figure of what an employee in the UK needs to live. This is currently £9.15 per hour in London and £7.85 everywhere else. It is not compulsory and employers pay this rate on a purely voluntary basis.

In the budget speech in July 2015, the Chancellor of the Exchequer announced a new compulsory National Living Wage which will come into force from April 2016. It will be paid to workers aged 25 and above. It will be set initially at £7.20 per hour and is intended to exceed £9.00 per hour by 2020

If you are already paying at or above these pay scales, you need do nothing, other than keep an eye open for increases as they are announced.