The New National Living Wage: is it a good thing?

Businesses give a mixed response to the new National Living Wage

Just a quick reminder for those of you who have missed the headlines over recent months.

As of 1 April 2016 the Government will introduce a new mandatory National Living Wage of £7.20 per hour. This replaces the National Minimum Wage (NMW) for workers aged 25 and above, although the NMW will still apply for workers aged 24 or under. A full listing of the rates for NMW can be found on the gov.uk website.

Organisations that pay workers below this minimum rate will be named and shamed publicly and could face financial penalties.

The National Living Wage has been met with a mixed response. Some businesses are in full support of the movement towards increased pay and, in turn, increased living standards for its workers. Some businesses, which have already adopted and implemented increases in pay, have reported a decrease in sickness absence and an increase in production – both of which can only be beneficial to businesses.

On the other hand some businesses are less optimistic about the positive impact the National Living Wage will have and, as some businesses continue to struggle financially to remain open, are reported to be considering their options including reducing headcount and, in worst case scenario, predicting closures.  

Should you require any advice in respect of the implementation of these changes within your workplace, or should you have another employment law query, please do not hesitate to contact Nicola Cockerill in employment on 01733 882800.

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.