National Living Wage - what is it?

The new National Living Wage (NLW) will set a new minimum wage for employees over the age of 25 working in the UK.

While the NLW is aimed to ensure low wage workers gain from growth in the economy, the National Minimum Wage (NMW) will still apply to those under the age of 25.

From April 2016 the following rates will apply:
NLW NMW
25 and over 21 – 24 18 – 20 Under 18 Apprentice
£7.20 £6.70 £5.30 £3.87 £3.30

The Office for Budget Responsibility has estimated 6 million employees will see their wages increase as a result of the NLW.

What this means for employers

From April 2016, employers will have to ensure that employees over the age of 25 receive a gross pay of above £7.20 per hour.

Like the NMW rules for salary sacrifice, the gross pay must remain above £7.20 after any salary amendments according to NLW rules.

How Wider Plan will help

We already provide employees with a NMW calculator when signing up for salary sacrifice schemes. We have improved our online calculators to account for the NLW. This will advise employees whether or not they can sign up to the salary sacrifice scheme.

What employers need to do?

Employers need to review their payroll to ensure that all employees’ gross pay is above £7.20 from April 2016 onwards.

Any in-house payroll checks that are used when an employee signs up to a salary sacrifice benefit need to be updated to consider the new NLW.

If you have any questions regarding the introduction of the NLW, please contact us on 0800 612 4395.