Changes to Employee Wages

As part of the 2015 Budget, a new National Living Wage has been announced that will become compulsory from April 2016. All employees over the age of 25 years will be entitled to a £7.20 per hour minimum wage regardless of their role, experience or skills. At present, the living wage is an informal agreement that employers can pledge to be a part of. The rates are calculated based on the average cost of living and equates to £7.85 per hour or £9.15 per hour in London. Currently, the Low Pay Commission advises the government on the National Minimum Wage but moving forward, they have been invited to get involved in the setting the National Living Wage from April 2017.

 

Whilst the Living Wage Foundation is happy with this introduction, there have been a number of concerns raised. The financial implications on small businesses and those that have a large but lower paid workforce could be critical. The Chancellor may have implemented adjustments in employment and tax allowances to compensate for the increased costs, but there is still a risk of job loses. Others have argued that an increase in wages for all workers will close the difference in pay between skilled workers/those that have undertaken specialist training or education compared with employees that have a more generalised skill base. It is unlikely that employers will be able to afford to proportionately increase the wages of all employees, therefore causing low moral and a lack of motivation.

 

National Minimum Wage

Apprentice

Under 18

18 to 20

21 and over

25 and over

From 1st October 2014

£2.73

£3.79

£5.13

£6.50

£6.50

From 1st October  2015

£3.30

£3.87

£5.30

£6.70

£6.70

From 1st April 2016

£3.30

£3.87

£5.30

£6.70

£7.25