National Living Wage – increase next year

You’ll know by now that each year the government announce increases to the National Minimum Wage and the National Living Wage. Predictions are in for what the new National Living Wage rate will be in 2019 and it’s a significant increase so worth planning for…..

What is the National Living Wage?

This is the rate that employers legally have to pay to their employees over the age of 25. It was first introduced in 2016 at £7.20 and resulted in significant costs to many employers.

Many people are still confused by the other term ‘Real Living Wage’. Just to clarify, this is the figure calculated by the Living Wage Foundation based on the real cost of living in the UK. It causes confusion but the main difference is that there is no legal requirement to pay the ‘Real Living Wage’.

What will the National Living Rate be next year?

The rate is currently £7.83. Phillip Hammond announced in the recent budget that the National Living Rate would be rising to £8.21 next year. This represents a 4.9% rise to the current rate and therefore one that employers need to start planning for.

(For information the real living wage has been announced as a 2.9% increase to £9.00 per hour except for London where it increases by 3.4% to £10.55).

Don’t get caught out

The next rise will take effect in April next year. Remember, employers who are incorrectly paying their staff below the minimum rates can be named and shamed and also fined up to 200% of the underpayment. Most employers caught by this in the past were as a result of simple errors and not deliberate attempts to underpay their staff.

Start planning

You know it’s coming and we recommend that you analyse your workforce now to assess the cost and plan for the increases.