In the July budget, the government announced that it planned to introduce a new National Living Wage (NLW) at a premium of 50p above the National Minimum Wage (NMW) rate, with effect from 2016.
The draft National Minimum Wage (Amendment) Regulations 2016 (the NMW (Amendment) Regulations) have now been published and will come into force on 1 April 2016.
The current NMW is £6.70 per hour for workers aged 21 and over. The NMW (Amendment) Regulations amend the existing NMW regulations to add a new NLW rate of £7.20 for workers aged 25 and over. The Regulatory Policy Committee, which advises the government, estimates that the change will cost employers over £800m in additional wage costs. Surveys suggest that the introduction of the NLW will push up wages for more than half of employers, many of whom are planning to make savings by increasingly productivity. The NMW (Amendment) Regulations also increase the financial penalty which is payable by employers who fail to pay the NMW (or NLW) from 100% to 200% of the underpayment due to each worker.