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8 months ago by Melissa Kilday

Increase to the National Minimum Wage & National Living Wage

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As of 1st April 2018 the National Minimum Wage and the National Living Wage are set to increase, this is a decision made by the government in an attempt to tackle the gap between wages and the growing cost of living. This should have an impact and positive improvement on the standard of living for minimum earners. MP Philip Hammond has said this is “the largest increase in youth rates in 201 years”.

Full time workers on basic pay are set to earn around £600 more annually and £50 more monthly with the National Living Wage for over 25’s increasing from £7.50 to £7.83, this is great news for hard working employees in the UK. Although we are taking steps in the right direction to support our workers the Living Wage Foundation has found that, we are still behind the ever increasing UK Living Wage which currently stands at £8.75. The UK Living Wage is based on the amount workers need to earn to live.

The UK government have had growing concern for the future of our millennials and their standard of living. It has been brought to their attention that young workers earning the minimum are struggling to save, get on the property ladder and live at the same standards available to previous generations.

Due to the publicity surrounding this we have seen many organisations making positive changes to the way they pay their lowest earners and are promoting the importance of rewarding hard working employees with a decent days pay. We are now seeing a number of high profile businesses disrupting well-earned pay rises. Making these changes can also have a huge impact in the desirability to work at your organisation for new recruits. Offering a competitive salary can prove crucial in today’s labour market, which is particularly important given the skills shortage we are experiencing.

What is the difference between National Minimum Wage and National Living Wage and how are they changing?

All workers who are 25 years and older are entitled to National Living Wage and workers under 25 years are entitled to the National Minimum Wage. However, the National Living Wage does not include workers over 25 years that are Volunteers, Self Employed, Company Directors, work experience students or a member of the Armed Forces.

Below is how you should see minimum earners hourly wages increase dependant on category:

National Living Wage (25 years +)

£7.50 - £7.83

National Minimum Wage

21 - 24 years £7.05 - £7.38

18 - 20 years £5.60 - £5.90

16 - 17 years £4.05 - £4.20

Apprentices £3.50 - £3.70

Employers are legally obliged to implement these wage increases as of April 1st 2018 and if found to be non-compliant will face up to a £20,000 fine for each worker being paid less than minimum, they will be ordered to pay the outstanding arears to the employee/employees and will be subject to a 15 year ban from working as a Company Director.

Read more about the regulations surrounding NLW and NMW on the Gov UK website - https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage