The National Living Wage Managers’ Forum 22 October 2015 Nicola Brown.

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Presentation transcript:

The National Living Wage Managers’ Forum 22 October 2015 Nicola Brown

What is the National Living Wage? A surprise announcement in the Budget in July To take effect from April 2016 A ‘premium’ on top of the National Minimum Wage – only for workers aged 25 or over

What is the National Living Wage? The NLW rate from 1 April 2016 will be £7.20 per hour (as compared with current NMW rate of £6.70 for over 21s) The Government has said it intends the NLW to be £9.00 per hour by 2020.

What the National Living Wage isn’t NLW is not the same as the Living Wage Living Wage is a voluntary rate calculated according to the basic cost of living Set by the Living Wage Foundation and is currently slightly higher than the NLW, £7.85 per hour (£9.15 in London). Confusion of terminology

How will the NLW be enforced? Announcement made in September Fines for non-payment will double to 200% of unpaid wages for each underpaid worker up to a maximum of £20,000 Enforcement budget being increased Directors’ liability

What does this mean for employers? Particular impact on sectors with small margins Loss of control over staff pay May mean redundancies or cutting back other benefits Narrowing the gap between grades?

What does this mean for employers? Currently the national average hourly rate paid by LAs for older people’s home care is £13.66 The UK Homecare Association estimates that the NLW (along with other costs such as pension auto-enrolment) means that the minimum hourly rate would need to be £16.70

What does this mean for employers? Up to 1m of the 1.4m workers in the care sector will get pay rises by 2020 NLW will cost an estimated £1bn to the sector Funding gap - could lead to a ‘catastrophic failure’ unless extra money is found

Any Questions?

Nicola Brown Partner, Pure Employment Law