Will the National Living Wage be rolled out to all?

03 August 2018

The National Living Wage (“NLW”) (Extension to Young People) Bill 2017-19 (“the Bill”) was presented to Parliament on 19th July 2017 and sailed through its first reading without debate, however, the Bill's second reading on 6th July 2018 was adjourned and is set to recommence on 23rd November 2018.

Labour MP, Holly Lynch, introduced a private member's Bill which proposes to extend the NLW to workers aged 18 to 24 as opposed to only workers aged over 25 being entitled. The second reading of the Bill was adjourned due to lack of time, but many believe that the Bill’s success thus far indicates that NLW legislation being extended to a lower age group is a very real possibility in the near future.

The current NLW rate is £7.83 per hour which is nearly 33% higher than the National Minimum Wage (“NMW”) rate for 18 to 20-year olds of £5.90.

If the Bill receives Royal Assent, in its current form, it will see all workers aged 18 and above entitled to the NLW rate per hour.

To view the Bill, click here.

Aspire Comment

It’s an age-old debate;

Does minimum wage legislation have unintended consequences such as employers favouring job applications from younger candidates due to the lower cost of employment?

Or, do lower minimum rates for younger workers compensate for a lack of experience and the necessity of training and development?

Despite which side of the fence you sit on, any extension to the NLW rates has financial repercussions on employers and so, if all workers aged 18 and over are entitled to the NLW, it will have a massive financial impact on employers in all sectors.

An extension of the NLW legislation will also see the cost of getting it wrong increased as all workers will be entitled to higher rates which, in turn, will increase arrears and penalties for failures.

Aspire will keep you updated on any further development.