The new National Minimum Wage (NMW) and National Living Wage (NLW) rates came into effect on 1 April 2019. The NLW was introduced on 1 April 2016 and is the minimum hourly rate that must be paid to those aged 25 or over. The NLW increase is the biggest single increase since the rate was introduced. The new rate is £8.21 which is a 38p or almost 5% increase. This means that some 1.8 million employees earning the NLW will see an extra £690 a year in their pay packet.
The hourly rate of the NMW (for 21-24 year olds) increased to £7.70 (a rise of 32p). The rates for 18-20 year olds increased to £6.15 (a rise of 25p) and the rate for workers above the school leaving age but under 18 increased to £4.35 (a rise of 15p). The NMW rate for apprentices increased by 20p to £3.90.
The new rates mirror the recommendations made by the Low Pay Commission (LPC) which were accepted in full by the Government. The independent Low Pay Commission (LPC) was established following the National Minimum Wage Act 1998 to advise the government on the NMW. It is made up of representatives from all sides of industry.
There are significant penalties for employers who are found to have paid workers less than they are entitled by the legislation.