Employers urged to prepare for paying the National Living Wage

Ministers have urged employers to start preparing now for the National Living Wage (NLW), which comes into effect on 1 April this year.

Research carried out on behalf of the government suggests that 93% of businesses support the move but many haven’t yet started to prepare. They’re being urged to follow four simple steps.

• know the correct rate of pay – £7.20 per hour for staff aged 25 and over
• find out which staff are eligible for the new rate
• update the company payroll in time for 1 April
• communicate the changes to staff as soon as possible.

Business Minister Nick Boles said: “By taking these measures, companies will be able to properly reward their staff and avoid falling foul of the law when it takes effect.”

The penalty for failing to pay the living wage will be double the level of the arrears up to a maximum of £20,000 per worker. The penalty will be halved if employers pay within 14 days.

Guilty employers may also be considered for disqualification from being a company director for up to 15 years.

A survey conducted for the Department for Business, Innovation and Skills (BIS) asked 1,000 employers across Britain about the NLW. More than eight out of 10 thought it would boost morale and make staff more productive. Eight out of 10 also believed that customers would be more likely to return if they knew businesses paid the right rates of pay.

Despite the widespread support, only four out of 10 employers had updated their payroll or spoken to staff affected by the changes.

Please contact John Carter if you would like more information about the issues raised in this article or any aspect of employment law.