Proposed Increases to the National Living Wage and National Minimum Wage Rates Accepted by the Government
In spring 2019, the Government asked the Low Pay Commission to recommend the 2020 rate of the National Living Wage with the aim that it reaches 60% of the median earnings by 2020. The Government also asked the Low Pay Commission to recommend the National Minimum Wage rates that apply to younger workers with the view that the rates are as high as possible whilst avoiding any damage to their employment prospects for these workers.
The Low Pay Commission recommended that:
- The National Living Wage (for workers aged 25 and over) should increase from £8.21 to £8.72;
- The rate for 21-24 year olds should increase from £7.70 to £8.20;
- The rate for 18-20 year olds should increase from £6.15 to £6.45;
- The rate for 16-17 year olds should increase from £4.35 to £4.55; and
- The apprentice rate (for apprentices aged under 19 or in the first year of their apprenticeship) should increase from £3.90 to £4.15.
The Government have accepted these recommendations and as such the above increases are due to come into effect from April 2020, subject to Parliamentary approval. The government intends to lay implementing regulations before Parliament in due course.
It is important for employers to take note of the changes when they take effect as if employers fail to pay employees at the relevant minimum hourly rate it could result in legal action from the employees and/or an investigation by HMRC who could publically “name and shame” the employer.
This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as, legal advice.
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