Category Archives: National Living Wage

National Minimum Wage Increases

national-living-wage

SUMMARY: The government has announced that from 1 October 2016 changes to the National Minimum Wage will come into effect.

THE CHANGES

The following changes to the national minimum wage will take effect from 1 October 2016:

1 April 2016 From 1 October 2016
National Living Wage £7.20

£7.20

Standard Adult Rate £6.70

£6.95

Development Rate £5.30

£5.55

Young Workers Rate £3.87

£4.00

Apprenticeship Rate £3.30

£3.40

THE CATEGORIES

THE NATIONAL LIVING WAGE

This rate applies to workers aged 25 or over.

THE STANDARD ADULT RATE

This rate applies to workers aged 21 or over.

THE DEVELOPMENT RATE 

This rate applies to workers aged between 18 and 20 inclusive.

THE YOUNG WORKERS’ RATE

This rate applies to workers aged below 18 but above the compulsory school age but who are not apprentices.

APPRENTICESHIP RATE

This rate was introduced in October 2010 and applies to all apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship.

CONTACT DETAILS

For more details about the national minimum wage changes please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.

FG Solicitors’ quick guide to key payments by employers

As part of our popular “quick guides” series, our team of employment law experts has produced an easy to use guide to key payments by employers. For more comprehensive advice on payments which should be made as well as when employees qualify for them, please contact a member of our team using the details below.

STATUTORY WEEKLY PAYMENTS DURING ABSENCES FROM WORK

April 16

Maternity/adoption pay prescribed rate (max)

£139.58

Paternity pay (max)

£139.58

Shared parental pay (max)

£139.58

Sick pay

£88.45

Lower earnings limit  (a)

£112.00

 

NATIONAL MINIMUM WAGE RATES (HOURLY)

April 16

October 16

Apprentices  (b)

£3.30

£3.40

Age 16-17

£3.87

£4.00

Age 18-20

£5.30

£5.55

Age 21-24

£6.70

£6.95

National Living Wage (Age 25+)

£7.20

£7.20

 

KEY COMPENSATION LIMITS

April 16

Week’s pay

£479

Statutory redundancy payment: up to 30 weeks’ pay

£14,370

Unfair dismissal basic award: up to 30 weeks’ pay

£14,370

Unfair dismissal compensatory award  (c)

£78,962

Breach of right to be accompanied: up to 2 weeks’ pay

£958

Breach of flexible working regulations: up to 8 weeks’ pay

£3,832

Failure to give written particulars of employment: 2 or 4 weeks’ pay  (d)

£958 or £1,916

Breach of contract claim in employment tribunal

£25,000

Failure to inform or consult: collective redundancy  (e)

90 days’ pay

Failure to inform or consult: TUPE transfer  (e)

13 weeks’ pay

…….

Key:

(a). To qualify for these payments, in addition to other criteria such as length of service, the employee must earn the same or more than the weekly lower earnings limit (“LEL”), which is set by the government. The LEL from April 2016 is £112.00 before tax.

(b). Only applicable to those under 19 or in the first year of their apprenticeship. For all other apprentices, refer to age bands.

(c). Maximum compensatory award is lower of statutory limit or 52 weeks’ actual gross pay at the time of dismissal. Limit does not apply where reason for dismissal or redundancy selection is carrying out health and safety activities or making a protected disclosure.

(d). Please see our guide to essential contracts.

(e). Calculated by reference to employee’s actual gross pay – the limit on a week’s pay does not apply.

Contact Details

For more details about amending handbooks or contracts of employment or consulting with your workforce please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

National Living Wage FAQs

When does it come into force?National Living Wage - FG Solicitors

1 April 2016.

How much is it?

£7.20 per hour.

Is there a small employer exemption?

No. All employers will be obliged to pay the National Living Wage.

Who does it apply to?

Workers aged 25 or over.

Where has this come from?

It falls under the National Minimum Wage legislation.

Is it the same as the Living Wage? 

No, organisations must pay workers the National Living Wage, but the Living Wage is voluntary, set by the Living Wage Foundation and calculated according to the basic cost of living in the UK.  The current UK Living Wage is £8.25 per hour and the current London Living Wage is £9.40 per hour.

What payments can be taken into account when deciding if the correct rate is being paid?

There are a number of elements of pay that can be taken into account. These include basic pay, bonus, commission, piecework and accommodation allowances.

Are pension payments made by the employer taken into account when deciding if the correct rate is being paid?

No.

What about tips?

Tips cannot be taken into account when calculating whether the correct rate has been paid to the worker. This is even if the tip is paid through the payroll system.

Is there an easy way of checking if I am paying the correct amount?

The Government has published an online calculator which can be used by employers and employees to determine whether the correct amount is being paid. This can be accessed at:

https://www.gov.uk/am-i-getting-minimum-wage

What happens if I fail to pay the correct amount from 1 April 2016?

The rates are enforced by the HMRC and those employers who fail to pay the correct rates will face financial penalties.

Contact Details

For more details about the National Living Wage please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.