In his most recent Budget (29 October 2018), the Chancellor announced that the National Living Wage (NLW), paid to workers aged 25 or over, will rise from £7.83/hour to £8.21/hour in April.
The 4.9 per cent rise represents an annual increase of approximately £690, for a full-time worker, meaning many low-paid workers will see their pay rise above current levels of inflation.
First introduced back in July 2015, the Government anticipate that, by 2020, the NLW will be 60 per cent of median earnings.
Though higher than the National Minimum Wage (NMW), which is paid to workers 25 and under, the NLW still does not satisfy the Living Wage Foundation’s recommendation of £8.75/hour (£10.20/hour in London).
The NMW, which applies at varying rates dependent on age, will also increase from April as follows:
|National Minimum Wage (per hour)|
|Age 21-24||Age 18-20||Age under 18||Apprentice|
|From April 2019||£7.70||£6.15||£4.35||£3.90|
The Living Wage Foundation, concerned that workers needs were not being met, devised the ‘Real Living Wage’ (RLW); a more generous, independently calculated rate, intended to reflect what people need to spend to feed, clothe and house themselves. Unlike NLW the RLW is a voluntary scheme that companies can sign up to.
The current RLW rates are £9 for workers outside of London and £10.55 for those in London.
Over 4,500 employers across the UK are signed up to the agreement, including large organisations such as IKEA and Google.
The report also revealed that women were more likely than men to be underpaid, while the worst-offending sectors were retail, hospitality and cleaning and maintenance.
Typically, there are one of two reasons why workers might not be paid correctly; either the employer knowingly underpays their staff, or a genuine error is made when it comes to implementing changes to rates.
Those who neglect to pay their staff correctly should be aware that it is a criminal offence not to adhere to the legal minimum rates.
Firms found to have breached these regulations must repay what is owed to staff and could face a maximum fine worth 200 per cent of the total underpayment.
Elaine Shaw, Payroll Manager at George Hay, said: “We say it every year, but every year it is as important as the last; employers must adhere to the legal minimum rates for both the NMW and the NLW.”
“Those who choose to flout the rules knowingly must realise that they cannot get away with it. Not only is it unfair on those employees who find themselves struggling because they have been underpaid, but also on those employers who make every effort to stay up-to-date and compliant with the latest legislative changes.”
“The Government must remain committed to tracking down those non-compliant employers and to ensuring the appropriate action is taken against them.”
At George Hay, we offer a dedicated outsourced payroll, and pay advice service to all industry sectors, tailored specifically to the requirements of each individual business.
Our professionals have the specialist knowledge and experience to help you with any payroll query you may have, so why not contact one of our team today on 01767 315010 or by emailing firstname.lastname@example.org