As has been widely publicised, the new National Living Wage came into effect today. As a result, workers aged 25 or over are now entitled to be paid a minimum of £7.20 per hour.
The National Living Wage is effectively the new ‘top rate’ of the National Minimum Wage (NMW). Perhaps as a result of this, the recent announcement of the new rates of the National Minimum Wage for workers under 25 have received less publicity. It is important to be aware that these new rates for younger workers do not come into force until 1 October 2016, from which date the following minimum hourly rates will apply:
For workers aged 21 to 24, £6.95.
For workers aged 18 to 20, £5.55.
For workers under 18 but above compulsory school age, £4.00.
For apprentices aged under 19 or in the first year of their apprenticeship, £3.40.
Employers paying below the NMW currently face a fine equal to 100 per cent of the underpayment owed to each worker, but this doubles to 200 per cent of the arrears owed if the debt is not cleared within 14 days. The maximum penalty is £20,000 per underpaid worker.
The Department for Business, Skills and Innovation has written a guide on calculating the minimum wage, which can be found here.