National living wage

From 1 April the new National Living Wage (NLW) is payable to workers aged 25 and over. The introductory rate is set at £7.20 an hour and is expected to rise to over £9 by 2020. BIS guidance on ‘Calculating the minimum wage’ has been updated to reflect the new wage. The Low Pay Commission will continue to advise the government on appropriate increases annually.
The government announced in February that over 90 employers had been ‘named and shamed’ for not paying the NMW. From 1 April the penalty for underpaying the minimum wage will double to 200 per cent of the arrears owed to each worker if the debt is not cleared within 14 days.
Just before the Budget in March, Chancellor George Osborne announced the following increases to the National Minimum Wage (NMW) from 1 October 2016:
•    Workers aged 21-24 rate rises from £6.70 to £6.95 an hour
•    Workers aged 18-20 rate rises from £5.30 to £5.55 an hour
•    Workers aged 16-17 rate rises from £3.87 to £4.00 an hour
•    Apprentices under 19 (or in first year of apprenticeship) rate rises from £3.30 to £3.40 an hour.
From 2017 both the NLW and the NMW will change on 1 April.
Phil Allen, employment partner at law firm Weightmans, commented that the size of the NMW increases was “something of a surprise”, and pointed out that from October they “will narrow significantly this age-related minimum pay gap”.
Chris Rowley, professor of human resources at Cass Business School predicted that the NLW would have a greater effect on small businesses, the accommodation, food services, retail and agriculture sectors, and on employers providing administrative and support services. “Worryingly, some firms have already looked at ways around the NLW, such as cutting benefits and perks, taking on younger workers, using apprenticeships and self-employment as convenient fig-leaves,” he said.
Kristie Willis, an employment solicitor at law firm BTMK, warned that employers attempting to minimise the NLW’s effects by recruiting younger employees “may amount to age discrimination.” She also thought that any businesses trying to engage contractors rather than employees in order to avoid paying it “should seek careful advice before doing this to ensure that any contractors are not actually considered workers under the NMW rules. If employers fail to comply, the overall maximum penalty is £20,000 per worker.”
Angela Wright, senior lecturer in human resources management at Westminster Business School, said there was a concern that a rise in the lowest pay rate could “trigger pay claims from others in the organisation, particularly those paid just above the new rate. Companies may find it beneficial to move to pay structures which use pay ranges, rather than the single point or spot pay rates used by some large retailers, so they can manage the introduction and development of the NLW more effectively.”