"The minimum wage has been one of the UK's biggest policy successes in recent decades, delivering much-needed pay rises to millions of low-paid workers.
Its success is dependent on employers taking it seriously, with those firms paying it not being undercut by a minority that fail to do so.
The welcome introduction of the National Living Wage in 2016 has led to a worrying rise in minimum wage underpayment. As the government plans to increase the legal wage floor through this Parliament, it is essential to strengthen the incentives for firms to comply."
The rates to be applied from April 2020 are as follows:
25 years old and over - £8.72
• • • • •
21-24 years old - £7.70 18-20 years old - £6.15 Under 18 - £4.35 Apprentices - £3.90
CIPP comment
The topic of National Minimum Wage and National Living Wage is very prevalent within contemporary society, and there is pressure on employers to act in an ethical manner, and to comply with the law. The penalties surrounding non-compliance in this area can be substantial. There may be scenarios where businesses believe that they are abiding by the law but where there is a lack of understanding which means that a process is bringing employee pay below the NMW or NLW. In recognition of this, the CIPP offers a day long training course to help payroll professionals with the complexities of observing NMW and NLW rates. The next course is scheduled to take place in Solihull on 26 February 2020, and you can enrol here.
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Interesting research into the effects of the National Living Wage from the Low Pay Commission 21 January 2020
The Low Pay Commission (LPC) has published a new blog discussing two key pieces of research that have been carried out in relation to the National Living Wage (NLW) and how it relates to inequality and job progression.
Two major questions were introduced by the LPC and the findings published back in December of last year. They addressed whether the minimum wage had an impact on wage inequality and if increases to the minimum wage aided or impeded people when trying to make the transition into a better-paid job. The LPC provides recommendations to the government in relation to the future of the minimum wage within the UK and carries out research in order to reinforce those proposals, exploring the effects of the increasing minimum wage on not only individuals, but also on businesses. This particular research was a two-year project which was commissioned in 2018. Silvia Avram from the University of Essex and Susan Harkness from the University of Bristol carried out the research and, as part of the study, examined the NLW’s effects on wage ‘spillovers’. This term refers to how an increase to the minimum wage benefits not only those directly affected by it but those who earn slightly above the minimum wage rate, who also end up receiving a pay rise. The extent of spillovers was assessed by examining wage distribution across regions. Researchers looked at variations across different ‘travel-to-work’ areas and controlled for other differences between areas.
Findings implied that only about seven percent of the workforce are paid the NLW, and in the period to 2018, workers in the bottom 30 percent of the pay distribution benefited either directly or indirectly from it. Research also indicated
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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