From 01.04.16 the Government are introducing a new mandatory National Living Wage for all workers aged 25 and older. This will be £7.20 an hour.

The National Minimum Wage will continue to apply to employees under the age of 25.

For employers in sectors such as retail and hospitality where many workers are paid at the National Minimum Wage this increase will be significant. For example:-

An employee working 40 hours per week will receive an increase of £1,040 per annum so for a business with 25 employees who are all eligible for the new rate, the costs start at £26,000 per annum.  In addition to this increase both the Employers National Insurance Contribution and the Work Place Pension Contribution must be recalculated to ensure that employers realise what costs they will be facing.

To compensate for the increase, the Government have also introduced a rise in the employment allowance from £2,000 to £3,000 to reduce some employers National Insurance Contributions.