Carter Jonas
Carter Jonas

National Living Wage rules from 1 April 2016

The national living wage (NLW) comes into effect from 1 April 2016. It introduces a rate of £7.20 an hour for workers aged 25 and older – the national minimum wage will still apply for workers aged 24 and under.

It is the start of a process announced by the Chancellor, George Osborne, in his Summer 2015 Budget. The intention is that by 2020 the National Living Wage will be more than £9 an hour.

In an effort to minimise the impact on employers, from April 2016 the National Insurance contributions (NICs) Employment Allowance will rise from £2,000 to £3,000 a year. When introduced in 2014, the Employment Allowance offset the NICs costs of employing four workers full time on the NMW. The increase in the Employment Allowance means four workers can be employed full time on the new NLW next year without paying any NICs.

The current NMW is:
  • £6.70 per hour
  • 18 to 20 year olds: £5.30 per hour
  • 16 to 17 year olds: £3.87 per hour
  • apprentices*: £3.30 per hour

*This rate is for apprentices aged 16 to 18 and those aged 19 or over in their first year. All other apprentices are entitled to the NMW for their age.

As an agricultural sector employer you may offer accommodation as part of employment and this can be offset against the statutory minimum wage. There is a useful calculator at https://www.gov.uk/national-minimum-wage-accommodation

It’s important to be aware of significant dates such as employee birthdays to ensure people are paid at or above the correct minimum wage for their age. There are also rules about rates for different types of work, such as piece work, and holiday pay entitlements.

Tim Jones

Tim JonesFRICS

Partner - Head of Rural Division

Tim is head of the firm's Rural Division and of the Cambridge office, although he spends a considerable amount of time in London.  He has over 20 years experience in advising institutional and pri...

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