National Living Wage increases by 4%

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24 Nov 2016

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The National Living Wage will rise from £7.20 to £7.50 for over 25s, Chancellor Philip Hammond has announced in today’s Autumn Statement.

The 4% increase, which will take effect as of April 2017, will almost certainly add pressure to those businesses who were stretched by the introduction of the Living Wage earlier this year. The rise in NLW, coupled with ongoing pressures presented by Brexit, could have a large impact on the SME market in particular.

This announcement could easily see many employers cut back on bonuses, re-evaluate workforces, and may even have an impact on trading trends.

Recent figures from Croner Reward show that for the upcoming year, between October 2016 and November 2017, participating employers forecast a 2.4% pay increase, which is very different to the 4% increase given by the Government. Alan Price, CEO Croner, says: “The introduction of the National Living Wage has without doubt been one of the biggest game-changers in recent employment history.

The biggest challenge is how employers have funded and will need to fund the wage increases. Unfortunately for some organisations redundancies have had to be made, it is likely that this increase will add to the burden of those organisations. In fact we are already getting calls in to our employment advice lines from concerned business owners."

Business Minister Margot James recently warned that the government will continue to crack down on those who ignore the law, including by naming and shaming them. Similar to the way that employers are disgraced for not paying their staff the National Minimum Wage, the National Living Wage offenders are, and will continue to be, publicly highlighted.

James states: “This government is determined to build an economy that works for everyone, not just the privileged few. “That means making sure everyone gets paid the wages they are owed – including our new, higher, National Living Wage. It is not acceptable that some employers fail to pay at least the minimum wage their workers are entitled to.”

Alan Price comments: “It is clear from the Government’s actions that they will come down heavily on employers who fail to pay the minimum wage. Financial and personal penalties are already set particularly high in this area, and the announcement today will increase those further.”

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