What is the National Living Wage?

On April 1st 2016, the Government’s new National Living Wage became law.

As a result, your earnings might be have been affected – especially since the amount was updated on April 1st 2018. However, this will depend on a number of different factors, so it’s always important to know what you’re entitled to.

We spoke to the Money Advice Service for more information on the change, and to find out exactly who is eligible for the National Living Wage:

 

What is the National Living Wage?

The National Living Wage replaced the National Minimum Wage for those aged 25 and over, and legally requires employers to pay their staff a minimum of £8.21 an hour.

Most people aged over 25 who were previously covered by the National Minimum Wage will be covered by the National Living Wage. This includes employees; most workers and agency workers; casual labourers; agricultural workers and apprentices.

There are differences between ‘employees’ and ‘workers’, but for the purposes of the National Living Wage there is no difference. To find out more about the differences, read our quick guide to your employment status.

If you’re an apprentice, you must have been in your apprenticeship for a year or over to be paid the National Living Wage.

 

What’s the difference between this and the National Minimum Wage?

The National Minimum Wage, which is the current minimum amount, will still apply for workers aged 24 and under.

The minimum wage for those under 25 is £7.70 an hour, £6.15 for under 21-year-olds and £4.35 for under 18s.

The National Minimum Wage and National Living Wage are subject to change every year.

 

Who is exempt?

To be entitled to the National Living Wage, you must be aged 25 or over.

To qualify for the National Minimum wage, you must be of school leaving age or over. In other words, you must have turned 16 by the last Friday in June of the current school year.

If you are self-employed (i.e. a client pays you for your services but you pay your own tax and National Insurance and can decide when you work) you are not eligible for either the National Minimum Wage or National Living Wage.

Other exemptions include those in the armed forces, company directors and voluntary workers.

Work experience can be paid, but it isn’t a legal requirement to pay you. You should find out the arrangements with your employer beforehand.

 

How do I calculate whether I’m being paid correctly?

The National Minimum Wage and National Living Wage are both worked out as an hourly rate.

Your average hourly pay is worked out over a period called the ‘pay reference period’, which is usually the period of time that you are actually paid for.

So, for example, if you’re paid weekly, your pay reference period is one week and if you’re paid monthly, it’s one month.

Your pay reference period can’t be longer than 31 days, and you must be paid the minimum wage, on average, for the time worked in the pay reference period.

To work out whether you’re being paid correctly, you can use the gov.uk minimum wage calculator.

 

* Please note, the information outlined above is intended for general guidance purposes only, and is subject to change at any time. This article was last edited in April 2019.

For more detailed information about minimum wage, please visit: https://www.gov.uk/national-minimum-wage.

 

 

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