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National Living Wage Now Payable and Government Guidance Published

As of 1 April 2016, workers aged 25 and over are entitled to be paid the National Living Wage (NLW) rate of £7.20 an hour.

The Department for Business, Innovation and Skills (BIS) has issued a new 55-page booklet on calculating the minimum wage. The booklet can be viewed on the following link:

Previously, there were four rates of the National Minimum Wage (NMW) for different categories of worker: the standard (adult) rate (for workers aged 21 and over), the development rate, the young workers rate and the apprentice rate.  However, with effect from 1 April 2016, the National Minimum Wage (Amendment) Regulations 2016 have introduced a fifth category of worker to whom the NLW will apply, namely those aged 25 or over. The existing provisions for determining whether the NMW has been paid will also apply to the determination of whether the NLW has been paid.

The BIS booklet provides case studies and examples of how to calculate NMW. The booklet also provides guidance regarding the working hours for which the NMW must be paid, including when sleeping time and travelling time can count as working time.

The NLW applies to pay reference periods beginning on or after 1 April 2016. The rate at which a worker is entitled to be paid in a pay reference period is the rate which applies on the first day of that period. This means that if, for example, an employer’s monthly payroll period begins on 15 April 2016, the worker should be paid the NLW rate (if eligible) from 15 April onwards (not from 1 April, when the rate came into force). 

This bulletin is for general guidance purposes only and should not be used for any other purpose.

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