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Employers need to keep 1 April 2016 in their diaries. This is an important date in terms of how workers are paid. Effective from 1 April 2016, employers must pay the National Living Wage (“NLW”) for those aged 25 and over. From the effective date, workers in this age bracket need to be paid a minimum of £7.20 per hour.
This is a good thing for individuals and obviously an extra cost to businesses (an increase of fifty pence per hour on the current National Minimum Wage). The other existing NMW thresholds remain the same for workers below age 25, these thresholds changing in October of each year. In essence, the NLW is just another tier to the NMW structure for those aged 25 and over.
There is also a voluntary rate in Scotland of £8.25 per hour. However, employers will be compliant with the law so long as they pay £7.20 per hour for those aged 25 and over.
Employers should also bear in mind that the Government is actively naming and shaming employers who do not comply with their obligations. Ensure that you keep your business off of the naughty list by increasing pay to match the NLW. In addition to claims for back pay, employers who act in breach of their obligations can also be fined up to £20,000 per employee!