The National Living Wage is to rise by 6.2%, in what the government says is the biggest cash increase ever. The rise is more than four times the rate of inflation and means that nearly three million workers across the UK are set to benefit.
But what does this mean for employers?
The new rates – from 1 April 2020
- National Living Wage (payable from age 25) – Increase from £8.21 to £8.72 an hour
- 21-24 year olds increase from £7.70 to £8.20
- 18-20 year olds increase from £6.15 to £6.45
- Under 18s increase from £4.35 to £4.55
- Apprentices increase from £3.90 to £4.15
The accommodation offset
The accommodation offset rises from £7.55 to £8.20 a day for each day when accommodation is provided during the pay period.
The cost of non-compliance
HMRC are responsible for enforcing compliance with the National Living Wage rates. They can investigate any employer who’s found failing to comply with these rates. The penalty is set at 200% of the total underpayment to a maximum of £20,000 for each underpaid person.
If the financial penalties aren’t enough of a deterrent, there are reputational implications to contend with. The government also operates a scheme to name and shame employers who fail to comply with the National Minimum Wage, additionally there are implications for company directors too, which could result in a ban from being a company director for up to 15 years.
As April approaches, now is the perfect time for employers to make sure that they have everything they need in order to comply with the new National Living Wage increase.