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The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum wage rates that must be paid to employees.

The UK government has announced a 6.2% increase in the National Living Wage (NLW). This applies to workers aged 25 and over. From 1 April 2020 the National Minimum Wage will rise from the current rate of £8.21 to £8.72 an hour, in the largest rise since it was introduced two decades ago.

Here are the wage changes:

Rate from 1 April 2019Rate from 1 April 2020
NLW for workers aged 25 and over£8.21£8.72
NMW main rate for workers aged 21-24£7.70£8.20
NMW 18-20 rate£6.15£6.45
NMW 16-17 rate for workers above school leaving age but under 18£4.35£4.55
NMW apprentice rate£3.90£4.15

When does the new National Living Wage come into force?

The UK government has confirmed the new National Minimum Wage rate will start on 1 April 2020. It will result in an increase of £930 annually for 2.8 million full-time workers earning the National Minimum Wage in the UK.

Workers aged under 25 earning the National Minimum Wage (NMW) will also see increases of between 4.6% and 6.5%, depending on their age.

Bryan Sanderson, Chair of the Low Pay Commission (LPC), said:
“The NLW has been an ambitious long-term intervention in the labour market. The rate has increased faster than inflation, faster than average earnings and faster than most international comparators. This has raised pay for millions without costing jobs, although employers have had to make a variety of other adjustments to deal with the increases.”

The government has announced that HMRC will continue publicly naming employers that fail to pay their workers the NLW or NMW, following a review of the scheme. The naming scheme will resume calling out businesses failing to pay their workers their minimum wage entitlements.

The government has also increased the threshold for naming employers from £100 to £500, meaning that employers owing arrears of more than £500 in NMW payments to their employees will now be named.

If you would like advice on how to implement the National Minimum Wage increase for your businesses employees, our experienced Payroll team can help you. Get in contact with us by emailing payroll@ellacotts.co.uk, calling 01295 250401 or contact us here.

Find out what else the Chancellor, Rishi Sunak, announced in his Budget speech on Wednesday 11 March here.