National Living Wage (NLW) introduced April 2016
When the new tax year begins, a National Living Wage (NLW) will be introduced which will apply to employees aged 25 and over and will initially be set at £7.20 per hour.
This is £0.50 per hour more than the National Minimum Wage (NMW), which currently sits at £6.70 per hour but is due to increase again in October 2016.
The Government plan to increase this NLW to £9.00 per hour by 2020.
Where employers feel they need to make redundancies due to not being able to afford to pay the new National Living Wage, they must be very cautious when selecting employees for redundancy as there is potential for age discrimination. This might occur where an employer selects employees over the age of 25 for redundancy and keeps the employees under the age of 25, who are not eligible for this new National Living Wage.
There will be penalties for non-compliance of the National Living Wage that will be enforced by HMRC. Employers who deliberately fail to pay this hourly rate to qualifying staff face fines of 200% of arrears owed, up to a maximum of £20,000 per each underpaid employee, although this will be halved if paid within 14 days. They may also face criminal charges and, if found guilty, may be disqualified from being a company director for 15 years.
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