Nearly three million workers are set to benefit from the increases in National Living Wage (NLW) and minimum wage rates for young workers.
Since its introduction in 1999, the NLW is a compulsory national rate set for people aged 25 and over. The NLW is enforced by HMRC alongside the national minimum wage (NMW).
Generally, all those who are covered by the NMW, and are 25 years old and over, will be covered by the NLW. These include:
- casual labourers
- most workers and agency workers
- agricultural workers
- apprentices aged 25 and over
2020 NMW/NLW rates increases
Taking effect from 1st April 2020, the increased rates were recommended by the Low Pay Commission, an independent body that advises the government about the National Living Wage and the National Minimum Wage.
The National Living Wage (for over 25 year olds) will increase 6.2% from £8.21 to £8.72.
The National Minimum Wage will rise across all age groups, including:
- A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
- A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
- A 4.6% increase from £4.35 to £4.55 for Under 18s
- A 6.4% increase from £3.90 to £4.15 for Apprentices
The £930 increase in annual earnings compares the gross annual earnings of a person working 35 hours per week on the new NLW rate from April (£8.72) versus the 2018/19 NLW rate (£8.21). The £3,680 increase in annual earnings compares the gross annual earnings of a person working 35 hours per week on the new NLW rate from April (£8.72) versus the 2015/16 minimum wage rate (£6.70).
Employers need to make sure they are ready for the new rates.
For further information, see the guidance calculating the minimum wage at Calculating Minimum Wage