HR · 5 April 2016

The National Living Wage: A comprehensive guide for micro business owners

NLW law
Make a mistake and you risk very significant financial penalties
it’s been talked about for months, but 1 April finally saw the policy become law. This guide tells you everything you need to know about the National Living Wage (NLW) and the risks to be keenly aware of.

If you have workers who are aged 25 or over, the minimum hourly rate you can pay them is now 7.20. The only exception is a person who is within their first year of an apprenticeship. Get this wrong and you risk very significant financial penalties as well as loss of business reputation.

What about the National Minimum Wage (NMW)?

We saw no changes in the rates for those under 25-years-old this April, with the most recent increase being seen last October 2015. The plan is that the NMW will next be increased in October 2016 with the NLW remaining unchanged at 7.20. The next planned review for both will then be aligned to April 2017.

The current NMW rates for younger workers and apprentices are as follows:

Age 21-24 18-20 16-17 Apprentice

Rate 6.70 5.30 3.87 3.30

When looking at apprenticeships in relation to the NMW it is important to note that the apprentice rate is only for those who are 16-18, or who are older than this but in their first year of their apprenticeship. Otherwise, the normal rate for their age applies so if someone is 25 or? over and in the second year of an apprenticeship, they are entitled to the full NLW.

Getting it wrong



Carole is as a freelance senior HR consultant with over 18 years experience in supporting small businesses. She founded HR Support for Business to provide an affordable, but still professional, outsourced HR Support service for micro and small businesses looking for guidance.