National Living Wage rate increases

As of 1 April, the National Living Wage (NLW) will increase to £8.72, giving a pay rise to thousands of workers at the frontline of the UK’s response to coronavirus.

Following recommendations made to the government by the Low Pay Commission (LPC) in the autumn, the rise means the rate reaches the target of 60 per cent of median earnings, originally set by the government in 2015.

The government confirmed in the March Budget its ambition for the NLW to continue increasing towards a new target of two-thirds of median earnings by 2024, and has asked the LPC to advise on whether the economic evidence warranted these increases.

The NLW, first introduced in 2016, is the statutory minimum wage for workers aged 25 and over. Different minimum wage rates apply to 21-24 year olds, 18-20 year olds, 16-17 year olds and apprentices aged under 19 or in the first year of an apprenticeship. Net year, the age threshold for the NLW will be reduced from 25 to 23, and then to 21 by 2024.

Bryan Sanderson, chair of the Low Pay Commission, said: “Many of the nation’s key workers – in, for example, the care sector, agriculture, transport and retail – are low-paid, are continuing to work in very difficult conditions and will benefit from today’s increase. At the same time, the government has introduced a comprehensive package of support for employers to lessen the impacts of these extraordinary circumstances.

“Under our new remit, the government asks us to monitor the labour market and the impacts of the National Living Wage closely, advise on any emerging risks and - if the economic evidence warrants it – recommend that the government reviews its target or timeframe. This is what the government refers to as the ‘emergency brake’. The ongoing Covid-19 pandemic clearly represents a very challenging set of circumstances for workers and employers alike, and will require us to review whether the emergency brake is required when we next provide our advice to the government. This advice will be crucially dependent as always on the economic data we receive.”