The 2020 National Living Wage comes into effect today (Wednesday 1 April), a 6.2% increase on the previous rate.

The 2020 National Living Wage comes into effect today (Wednesday 1 April), a 6.2% increase on the previous rate.

The new rate results in an increase of £930 over the year for a full-time worker on the National Living Wage. The rise means the government is projected to meet its target for the NLW to reach 60% of median earnings by 2020.

The full set of rates can be seen below:

  • the National Living Wage for those aged 25 and over will increase by 6.2% to £8.72 an hour
  • the National Minimum Wage for those aged 21 to 24 is increasing by 6.5% to £8.20 an hour
  • the National Minimum Wage for those aged 18 to 20 is increasing by 4.9% to £6.45 an hour
  • the National Minimum Wage for those aged under 18 is increasing by 4.6% to £4.55 an hour
  • the rate for apprentices is increasing by 6.4% to £4.15 per hour

In light of the pressure on businesses caused by the outbreak of COVID-19, the government has unveiled a comprehensive package of support to protect businesses and individuals, including an initial £330 billion of guarantees for businesses, £20 billion in business rates support and a new Coronavirus Job Retention Scheme to help pay people’s wages.

All financial support for businesses and workers from the government during this time can be found here on the Business Support website.

Alongside the increase in the National Living Wage and National Minimum Wage, further labour market reforms are also coming into place on 6 April, enhancing workers’ rights across the board. These include:

  • Parental Bereavement Leave and Pay, implementing a statutory right to a minimum of 2 weeks’ leave for all employed parents if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy. Eligible parents will be able to claim statutory pay while absent from work. This is the most generous offer on parental bereavement leave and pay in the world
  • workers to receive a day-one statement of rights, which will set out leave and pay entitlements to around 1.5 million people for the first time
  • the scrapping of the Swedish Derogation – an end to the legal loophole which enables some firms to pay agency workers less than permanent staff
  • new agency workers to benefit from a key facts page before signing up with an agency, which will provide clarity on their rights, particularly around their pay
  • just 2% of employees need to make a request for the employer to inform and consult them on issues relating to the business before an employer must commence negotiating such an arrangement. This has been reduced from 10%
  • increasing the reference period for calculating holiday pay for workers with variable hours from 12 to 52 weeks, meaning employers must count back across the last 52 weeks that employee has worked and received pay, to calculate how much holiday pay they should receive. This ensures that workers’ holiday pay is more reflective of the pay they would have received if they’d been at work.

The increase of the National Living Wage (NLW) will result in a pay rise to thousands of workers at the frontline of the UK’s response to Covid-19. This rise follows recommendations made to the Government by the Low Pay Commission (LPC) in the autumn. It means the rate reaches the target of 60% of median earnings, originally set by the Government in 2015.

In the 11 March Budget, the Government confirmed its ambition for the NLW to continue increasing towards a new target of two-thirds of median earnings by 2024. It asked the LPC to advise on whether the economic evidence warranted these increases.

“Many of the nation’s key workers – in, for example, the care sector, agriculture, transport and retail – are low-paid, are continuing to work in very difficult conditions and will benefit from today’s increase,” Bryan Sanderson, Chair of the Low Pay Commission, said. “The Government has introduced a comprehensive package of support for employers to lessen the impacts of these extraordinary circumstances.”

The LPC will give further recommendations to Government on the 2021 National Minimum Wage rates in October.

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Karen Wilkinson works at London School of Finance and Law and writes articles on UK tax law for My Taxes Plus and other financial magazines.


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