The new mandatory National Living Wage (NLW) has come into force today, requiring employees aged 25 and over to be paid at least £7.20 an hour.
It is expected to give 1.3 million workers an immediate pay rise.
The policy was announced in Chancellor George Osborne's Budget last summer, in an effort to create a higher-wage, lower-welfare economy.
Workers aged 21 to 24 will continue to be entitled to the National Minimum Wage of £6.70 an hour.
What is the NLW?
- A voluntary hourly rate set independently and updated annually
- The Living Wage is calculated according to the basic cost of living in the UK
- The current UK Living Wage is £8.25 an hour
- The current London Living Wage is £9.40 an hour
- Employers choose to pay the Living Wage on a voluntary basis
- The Living Wage enjoys cross party support, with public backing from the Prime Minister and the Leader of the Opposition
- Paying the Living Wage is good for business, good for the individual and good for society
- The Living Wage Employer Mark and Service Provider Recognition Scheme provide an ethical badge for responsible pay
What about the 'national living wage' announced by the Chancellor in the 2015 budget?
In July 2015 the Chancellor of the Exchequer announced that the UK Government will introduce a compulsory minimum wage premium for all staff over 25 years of age, and referred to it as the ‘national living wage’.
The government rate will be introduced in April 2016.
The government has instructed the Low Pay Commission that the minimum wage premium for staff over 25 should reach 60% of median earnings by 2020.
This would mean a rise to around £9 per hour by 2020.
The government rate is separate to the Living Wage rate calculated by the Living Wage Foundation.
The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.
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