Introduction of the new National Living Wage

31 March 2016 | David Widdowson

First announced in the 2015 Summer Budget, the compulsory National Living Wage will take effect from 1 April 2016.  This is set to start at £7.20 an hour and will rise to £9 an hour by 2020, replacing the current £6.50 minimum wage for workers aged 25 and over.  With more people in the UK on low pay compared to other advanced economies, the introduction of the National Living Wage is expected to boost the wages of 6 million people.

Although several large employers undertook to increase their pay before the new rules take effect, the Office for Budget Responsibility predicts that 60,000 people will lose their jobs as a result of the changes as employers will hire more workers under the age of 25 who can still be paid at the lower level of the minimum wage.  It will be interesting to see if a trend is discernible in an amount of increased age discrimination claims.

This change will represent a major challenge to many smaller employers as well as those in certain sectors such as retail.  Recent research from the Resolution Foundation also highlighted the impact this will have on certain regions of the UK with the cities of Sheffield, Nottingham and Birmingham particularly affected due to the percentage of low pay workers in these areas. For the affected workers this will bring a welcome boost in income but for their employers it will present several challenges of not only how to deal with their increased costs but also how to invest in new ways of working, training and equipment which can improve productivity levels.

The Department for Business, Innovation and Skills has published a guidance on how to calculate the minimum wage and more.  View the guidance here.

Contact us

To discuss your needs and how we could help you deliver them please get in touch.


Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The author

David Widdowson
Employment Law
Business Coaching
D: +44 (0) 207 036 8388
T: +44 (0) 203 051 5711
F: +44 (0) 203 051 5712

Also by the author

3 March 2021
Alternatives to Redundancies | Employers & HR Specialists
3 March 2021
UK Budget 2021: Furlough Scheme extended until September 2021
22 February 2021
UK Supreme Court Ruling – Uber Drivers Entitled to Workers’ Rights
Subscribe to our newsletter
Stay up to the minute on our latest news and insights?