Living Wage Introduced

A new compulsory National Living Wage for over-25s was outlined in the 2015 summer budget which will be set at £7.20 per hour from 1st April 2016 and will rise to £9 per hour by 2020.

The following minimum hourly wage rates also apply:

  • Aged 21 and above £6.70
  • 18-20 year olds £5.30
  • Under 18 year olds £3.87
  • Apprentices £3.30 (this rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year)

The new National Living Wage is not to be confused with the voluntary living wage that many companies currently employ, which is £8.25 per hour (£9.40 per hour in London).


For a full time employee over 25 on the minimum wage, these changes will result in a £5,200 increase in salary between 2015 and 2020. For the employer, who also pays employer’s National Insurance Contributions, the effective cost increase will be almost £6,000 per employee per year.

There will be an increase in the Employer’s NI Contributions holiday from £2,000 to £3,000, but this will barely be enough to cover the increased NI due for just one employee.