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What is the National Living Wage?

A new 'National Living Wage' of £7.20 per hour will be introduced next April for all working people aged 25 and over, the Government announced at its July budget.

The National Minimum Wage currently stands at £6.50 an hour, rising to £6.70 in October. But in April 2016, those over the age of 24 will get a 'premium' of 50p on top to bring the total to £7.20.

The National Living Wage represents 55 per cent of median earnings, which the Government has said will increase to 60 per cent 'subject to sustained economic growth'. The intention is that the National Living Wage will be more than £9 by 2020.

The Low Pay Commission, which has been responsible for recommending the levels for the NMW, has had its remit broadened for the National Living Wage.

It has been asked to take into account the state of the economy, employment and unemployment levels when it makes its recommendations in relation to the premium.

What's the difference between the National Living Wage and the Living Wage?

The names are similar, but they are quite different things.

From April 2016, employers will have to pay at least the National Living Wage to employees over the age of 24. Future levels will be set by the Government in conversation with the Low Pay Commission.

The Living Wage is a voluntary rate managed by the campaign group the Living Wage Foundation.

It is calculated annually according to the cost of living in the UK by the Centre for Research in Social Policy at Loughborough University. In London where the cost of living is higher, the rate is set by the Greater London Authority.

Its rate is now £7.85 per hour and £9.15 in London. More than 1,500 employers currently choose to pay the Living Wage.

Eligibility

Most UK workers over school leaving age are legally entitled to be paid at least the National Minimum Wage. Those eligible include agency workers, casual workers, part-time workers, pieceworkers, homeworkers and anyone working on commission.

Those not entitled include the self-employed, volunteers, students on work experience, people on certain training schemes, some company directors, workers living in an employer's household, residents of certain religious communities, prisoners, the armed forces and share fishermen.

Employers can be named, and face criminal prosecutions and unlimited fines for failing to pay at least the National Minimum Wage to eligible workers.

You can call the Acas Helpline or visit the Acas Helpline Online for advice about the National Minimum Wage.

Acas publications and services

Acas has information on the National Minimum Wage and National Living Wage, and can help you understand what you need to do to pay your employees correctly.

There's also Help for small firms on Handling pay and wages, the latest addition to Acas' suite of step-by-step guides, with everything you need to know to keep up with your obligations.

Acas experts can visit your organisation and help employers understand and meet their obligations surrounding pay and contracts. See the Workshops, projects and business solutions page for more information or call the customer services team on 0300 123 1150.

Practical training is also available on Contracts and terms and conditions, and for new employers, Employing People - A Practical Introduction.

For free, impartial advice and guidance visit Acas Helpline Online.

Visit the Acas Training Courses, Workshops and Projects area for more information.


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