You may have heard of the term the ‘national living wage’ in the news and wondered what it means. On the 1st of April 2016, all people over the age of 25 will see an increase to their hourly rate in line with the new ‘national living wage’. This is an hourly rate of £7.20 set by the Government and Low Pay Commission and is an informal benchmark which is compulsory for over 25’s. It will increase each year and it is predicted to increase to around £9.00 per hour by 2020.

How was £7.20 formulated?

The national living wage is based on median earnings and is an estimation of what the working market can bear. The set hourly rate covers the whole of the UK. This is not to be confused with the Living Wage, which is a term based on research put together by an independent organisation and is a recommended amount to pay workers based on the actual cost of living, being higher in London due to the increased cost of living there.

Why has the government introduced this?

The national living wage has been set to give employees a better living standard and a boost to their quality of life.

What to expect from 1st April

If you are eligible, your employer should automatically increase your hourly rate. Keep an eye on your pay slip to make sure that this pay has been implemented. If you are unsure or don’t appear to have an increase, speak to your employer or visit the Acas website. Workers under the age of 25 will still be paid the minimum wage applicable for their age. Your tax code should also change to reflect this increase.

Below is a list of links with further information.