Be prepared for national living wage and apprenticeship levy, employers are warned

From April, the Government will introduce a new mandatory national living wage for workers aged 25 and above, initially set at £7.20 – a rise of 50p relative to the current national minimum wage rate.

The apprenticeship levy will come into effect in April 2017, at a rate of 0.5 per cent of an employer’s pay bill. A £15,000 allowance for employers will mean that the levy will only be paid on employers’ pay bills over £3m. Less than two per cent of UK employers will pay the levy, the Government said when the scheme was announced last year.

John Harding, a partner with PwC who leads the pay performance and risk team in the North, said the impact of the national living wage will vary from retailer to retailer.

Commenting on the national living wage’s potential impact on major retailers, Mr Harding said: “On average, according to our survey, it’s about £8m per annum this coming year rising to £56m per annum by 2020.”

Speaking after the breakfast briefing in Leeds, he said: “Inevitably, there will be winners and losers in an arrangement like that. The winners will be those organisations that take the time now to really understand what is involved in the national living wage, and how they can re-skill their staff to make the most of what’s going to become an increasingly expensive asset of the business.

“Over the next five years, the people currently on the minimum wage will see increases of around about six per cent per annum, those slightly above (on the pay scale) are inevitably going to bargain to try and get some similar level of increase as well.”