When does it apply from?

The calculation date for the applicable rate of pay for each pay reference period is the first day in the pay reference period.  This means that the National Living Wage (NLW) will take effect from the first pay reference period that begins on or after 1 April 2016.  A pay reference period is a month or shorter if you pay your workers by reference to a period that is shorter than a month (for example weekly).  For some workers therefore the implementation of the NLW can be slightly delayed.

Future increases?

As you will be aware, the usual increases to the National Minimum Wage (NMW) take place on 1 October each year but it was indicated in the budget that from April 2017 the increases will be aligned so all increases will take place from 1 April each year.  However there will still be an increase to the NMW (as opposed to the NLW) in October 2016 to £6.95 for those aged 21 or over.

New guidance

The Department for Business, Innovation and Skills has also issued new guidance on calculating the NMW.  Sadly, this guidance contains nothing new on the fraught issue of whether all time spent carrying out a sleep-in shift should count for the purposes of calculating whether the national minimum (or living) wage has been paid.

Funding the increase

We have been helping Employers prepare for the introduction of the NLW in a number of ways including:

  • Implementing cost saving measures;
  • Reviewing pay structures and benefits; and
  • Re-negotiating contract prices with commissioners.

Further information

If you require further information or would like to discuss implementing changes within your organisation, please contact Faye Rush or Matthew Wort.

Contract management pitfalls – payment
Contract management pitfalls – payment

In the second part of our series on contract management pitfalls, we look at the risks and opportunities presented by payment mechanisms in construction contracts.