Preparing for the National Living Wage in April 2016

15 Dec 2015 Alex Hastings    Last updated: 16 Dec 2015

As part of HR and financial planning for 2016, this article from NICVA and Sector Matters HR looks at the introduction of the National Living Wage in April 2016.

What is the National Living Wage?
The National Living Wage has had a lot of media coverage since its announcement in July 2015. The compulsory National Living Wage is to be introduced on 1 April 2016 and it is for all working people aged 25 and over.

Is the National Living Wage replacing the National Minimum Wage?
No. The National Living Wage rate will be £7.20 per hour for people aged 25 and over. The current National Minimum Wage for those under the age of 25 will continue to apply and the rates set in October 2015 can be found here: http://www.nicva.org/article/national-minimum-wage-from-1-october-2015.

Is the National Living Wage the same as the Living Wage?
No. The National Living Wage is different from the Living Wage. The Living Wage is set independently by the Living Wage Foundation. The current Living Wage is £8.25. Employer's choose to pay the Living Wage on a voluntary basis whereas the National Living Wage will be compulsory from 1 April 2016. NICVA’s Centre for Economic Empowerment previously commissioned research by Oxford Economics analysing the economic impact of introducing the Living Wage in Northern Ireland and the findings are here: http://www.nicva.org/resource/economic-analysis-living-wage-northern-ireland

Is the National Living Wage set to rise after 2016?
The Government’s objective is to have a National Living Wage of over £9 by 2020. The Low Pay Commission, which advises the Government on the NMW rate, has been asked to also recommend appropriate levels for the NLW. Further information from the Government on the National Living Wage can be found here: https://www.nibusinessinfo.co.uk/content/new-national-living-wage-facts

Preparing for the NLW:

  1. Gather your facts about the current and projected age profile of your organisation to estimate the cost of the NLW in its first year.
  2. Look beyond the 2016 increase. With the Government seeking for the NLW to rise to over £9 in 2020, consider affordability of the incremental increases.
  3. Consider the knock on effect of implementing the NLW such as ensuring the pay structures in place reflect the value of jobs within the organisation.
  4. Ensure compliance to avoid fines as the Government has issued a package of measures around enforcement.
     

To receive free advice contact Alex McGimpsey, HR Manager, on 9087 7777 or email [email protected]  or for hands on support for specific HR issues, call Louise Foster, HR Consultant Sector Matters, on 9087 5015 or email [email protected]
 

alex.hastings@nicva.org's picture
by Alex Hastings

Human Resources Manager

[email protected]

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