What is the National Living Wage

What is the National Living Wage

The National Living Wage is the obligatory minimum wage that employers have to pay to workers in the UK, aged over 25 years. This law has not been around for long, as it only came into effect on 1st of April 2016, adding to the National Minimum Wage act of 1998. 

The National Minimum Wage covers workers that are below 25 years old or apprentices. 

The minimum wages are reviewed and published every year on the 1st of April. The UK Government sets these rates as high as possible “without damaging the prospects of employment of each group”. 

Companies that do not comply risk financial penalties as well as being “named and shamed”. As a business owner, you should always check any changes in your employees’ wages, so you are not inadvertently underpaying them and, therefore, breaching the laws. 

The current rates

Here are the current minimum rates (from April 2020 to April 2021) that your employees are entitled to. 

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 (current) £8.72 £8.20 £6.45 £4.55 £4.15
April 2019 to March 2020 £8.21 £7.70 £6.15 £4.35 £3.90

 

Previous rates

National minimum / living wages are recalculated and changed every year. As you can see in the table below, these rates have been increasing gradually.  

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2018 to March 2019 £7.83 £7.38 £5.90 £4.20 £3.70
April 2017 to March 2018 £7.50 £7.05 £5.60 £4.05 £3.50
October 2016 to March 2017 £7.20 £6.96 £5.55 £4.00 £3.40
April 2016 to September 2016 £7.20 £6.70 £5.30 £3.87 £3.30
 

Is the National Living Wage the same as real living wage? 

The short answer is no.. Real Living Wage is a minimum wage based on what an adult residing in the UK needs to live. This rate accounts for the basic costs of living, essential goods and services. It also has a separate, higher rate for London, as it is a more expensive living area compared to the rest of the UK. This is not a lawful rate and it is only up to you to pay these rates to your employees. 

Here’s how the three different rates compare: 

real living wage

Outsource your payroll

There is a lot of legislation related to paying your employees’ wages, including the national or minimum living wage rates and it updates at least annually. Outsourcing your payroll is the best way to ensure that everything is up to date and you are not inadvertently breaching the laws. 

Our Paperless Payroll bureau service is an efficient, cost effective and safe way to manage your payroll, from just one employee to hundreds. We have an experienced team and we’ll set up our payroll service to meet your requirements.

Read more here or contact us now to find out how we can help you.  Drop us an email on hello@asfb.co.uk or call us on 01202 755600