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The National Living Wage and what this means for employers

Rebecca Wilson, a Partner at leading regional law firm Tollers, looks at what the increase in the National Living Wage will mean to employers.

FROM October 2017 those who are 25 and over will be entitled to £7.50 an hour and this will rise to £9 by 2020 and is referred to, as a National Living Wage rather than a National Minimum Wage as it has been in the past.

The Government has warned businesses that they need to ensure that they are paying their staff correctly as the National Living wage will be enforced as strongly as the National Minimum Wage. According to some commentators, the Government rate has certainly given businesses a big problem. Many have looked at dealing with their increased wage bill by reducing their costs through better work force management.

The Government’s goal is now to build a Britain that works for all post-Brexit and it has been argued by some that the rise will lead to an increase in productivity. It should reduce the number of working poor and take some pressure off the Government’s benefits bill.

In January 2017, the Government launched a £1.7 million advertising campaign ahead of the rate increase. Historically, there have been some poor excuses for not paying workers the minimum wage. For instance, some claimed that it didn’t apply to foreign workers, that shop workers didn’t need to be paid when there were no customers to serve and one worker wasn’t paid the correct amount as she ‘only swept floors’.

The January campaign featured bus and billboard advertising to make April 2017’s increase effective. The campaign should empower the lowest paid in society to know their worth. HMRC’s enforcement budget is also set to increase from £13m to £20m to ensure that the new wage can be enforced effectively.

Since 2013, the Government has forced employers to pay back £3.5 million in missing wages. MPs still claim that the system is not tough enough and workers have complained that employers are often given the benefit of the doubt, but progress is progress and the increase can only be a positive move for employees.

What does this mean to you?

As an employer, it is important to stay on the right side of the new legislation and pay your workers their correct entitlements. 

If you need help understanding the new National Living Wage or anything else relating to your employees, then talk to Tollers on 01604 258558. We’re here for you.

Companies mentioned in this article

Tollers

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