National Living Wage and National Minimum Wage set to increase in April 2020

In a year set to be defined by an exceptional level of employment law change, the government kicked off 2020 with the announcement that the National Living Wage and National Minimum Wage rates are set to rise again, from 1 April 2020.

The National Living Wage is to rise by 6.2%, in what the government says is “the biggest cash increase ever”.  The rise is more than four times the rate of inflation and means that nearly 3 million workers across the UK are set to benefit.

But what does this mean for you as an employer? Let’s dive into the numbers…

The new rates – payable from 1 April 2020 – are:

• National Living Wage (payable from age 25) – £8.72 an hour (from £8.21)
• The adult rate (age 21 to 24) – £8.20 an hour (from £7.70).
• The development rate (age 18 to 20) – £6.45 an hour (from £6.15).
• The junior rate (age 16 [from school leaving age] or 17) – £4.55 an hour (from £4.35).
• Apprentices under age 19, or over 19 but in the first year of an apprenticeship – £4.15 an hour (from £3.90).

The accommodation offset

The accommodation offset rises from £7.55 to £8.20 a day for each day when accommodation is provided during the pay period.

The cost of non-compliance

HMRC is responsible for enforcing compliance with the National Living Wage Rates.  HMRC can investigate any employer who’s found failing to comply with these rates. The penalty is set at 200% of the total underpayment to a maximum of £20,000 for each underpaid person.

If the financial penalties aren’t enough of a deterrent, the government also operates a scheme to publicly name those employers who underpay their workers and ban them from being a company director for up to 15 years. So there’s also reputational damage to contend with, in the event of non-compliance.

Preparing for April

Now is the perfect time for employers to make sure that they have everything they need in order to comply with the new National Living Wage rise in April.

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