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NLW comes into force

Published: April 21, 2016

The new National Living Wage (NLW) has come into force this year and all workers are now entitled to receive the higher rate of hourly pay.

Under the legislation, all employers are required to pay workers aged 25 and over at least £7.20 an hour. This represents a rise from the £6.50 that was in place before the NLW was introduced.

The policy was announced in last summer’s Budget by Chancellor George OsborneAccording to the government, the higher rate is part of its plan to get more people off welfare and back into work, while creating a higher wage economy.

Speaking about the developments, Trades Union Congress general secretary Frances O’Grady told the BBC that younger workers have not benefited from the rise. She said: “Britain desperately needs a pay rise, and this increase is good news for those aged 25 or older. But the government must ensure that younger workers are not left behind; 21 to 24-year-olds will not be seeing an increase. This is not fair. Future wage increases must narrow the pay gap between old and young.”

Some critics have claimed that the NLW is not high enough. For example, the Living Wage Foundation pointed out that its own suggested level of pay – £8.25 an hour and £9.40 in London – was higher than the NLW.

The foundation’s director, Katherine Chapman said that there is still a way to go when it comes to tackling low pay. She added: “Businesses who can afford to pay a rate that reflects the real cost of living should do so and join over 2,300 employers signed up to pay our higher voluntary Living Wage.

“For profitable business, or those who see themselves as innovators and leaders, simply not breaking the law on pay is not enough. Many businesses want to aim higher.” By 2020, the NLW will rise to more than £9 an hour.

Mitrefinch offers payroll technology that can help businesses track and monitor all of their payments. 

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