The government's National Living Wage (NLW) was introduced on 1 April 2016 for all working people aged 25 and over, and is currently set at £7.20 per hour.
Following recommendations by the independent Low Pay Commission the Chancellor has announced that the NLW will now increase from £7.20 to £7.50 from 2017.
This increase is 10p lower than many had expected but it is still estimated that this will amount to an annual pay rise for more than a million workers.
It also means that earnings for a full time worker who was previously on the National Minimum Wage (NMW) will have increased by over £1,400 a year since the introduction of the NLW in April 2016.
The following increases to the NMW will also apply from April 2017:
- for 21 to 24 year olds – from £6.95 per hour to £7.05;
- for 18 to 20 year olds – from £5.55 per hour to £5.60;
- for 16 to 17 year olds – from £4.00 per hour to £4.05; and
- for apprentices – from £3.40 per hour to £3.50.
This is good news for workers and is in line with the ambitions set out by the prime minister in her speech to the Conservative conference last month.
However, apart from the increased business cost, there is also a continued onus on businesses to ensure compliance with NLW and NMW regulations. Related to this the government has also announced a commitment to invest a further £4.3 million a year to strengthen NLW and NMW enforcement. This investment will fund new HMRC teams to review employers considered most at risk of non-compliance, additional support for small businesses, and a campaign aimed at raising awareness among employees and employers on their rights and responsibilities.