A new National Living Wage (NLW) was introduced on 1 April 2016 for eligible workers aged 25 and over. This will also be reassessed annually, and any changes will take effect from 1 April each year.
The Government intends to align the increases to the National Minimum Wage and the National Living Wage rates so that they both take effect in April each year. This will take effect from April 2017, although the National Minimum Wage rate will still be reviewed in October 2016.
Even though the rates go up on 1 Oct and 1 April, workers may not qualify for the new rates straight away. Workers are only entitled to the new rate for pay reference periods that start on or after 1 Oct (NMW) or 1 April (NLW).
Pay reference periods are determined by how frequently a worker is paid (e.g. weekly, fortnightly, monthly). A pay reference period cannot be longer than one month.
For example, if a monthly paid worker has a pay reference period that ends on 10th October, they would only be entitled to receive the new, increased NMW rate from the first day of the new pay reference period, which would start on 11th October.
The same rules apply when a worker has a birthday that would entitle them to a higher rate of NMW or NLW – the worker is entitled to receive the higher rate from the start of the next full pay reference period after their birthday, and not from their birthday itself.
More information on calculating whether an individual is being paid National Minimum Wage and/or National Living Wage is available on the gov.uk website.
answered by ACAS
Please note: This is general information for educational purposes only and is not legal advice