The Living Wage, The National Living Wage (NLW) and The National Minimum Wage (NMW)

On 1 April 2016, the NMW rate will be increased significantly for workers aged 25 and over, with the introduction of what the Government is calling the NLW. The new rate will initially be set at £7.20 per hour but further rises are on the cards over the next four years. The NLW is simply the name the Government has chosen to give to a new rate of the NMW for workers aged 25 and over.  So, from 1 April 2016 there will be five NMW rates:

Employment Table

The Government wants future NMW increases to take effect in April each year rather than October and is looking at how this can best be achieved.

As for what payments count (and don’t count) towards the NLW, the same rules will apply to the other rates of the NMW. Similarly, the regulations on calculating hours of work will continue to apply across the board, including the rules on travel time, on call time, daily average agreements and fair piecework.
To deal with this, some employers may want to vary existing employment terms and conditions to absorb the cost of the NLW. This might include consolidating certain allowances or supplements into basic pay, or replacing benefits that don’t count towards the NLW with cash – so the value of an individual’s remuneration package might remain the same but with more of it counting towards satisfying the NMW.