On 1 April 2016 the Government will implement the new Living Wage for working people aged 25 years and over.  The new hourly rate will be £7.20 with the Low Pay Commission recommending future rises to as much as £9.00 by 2020.  National Minimum Wage conditions will still apply to eligible workers whom are under 25 years old.

The concept of a ‘living wage’ has its roots in many cultural and philosophical traditions but more recently a campaign was launched by a group of parents from London’s East End called London Citizens who were finding it difficult, despite working two or more minimum wage jobs, to earn a living and find time for family and community life.

After a number of high profile campaigns from the London Citizens, in 2005 the Greater London Authority established the Living Wage Unit to calculate the London Living Wage.  This has since grown nationally – with many trade unions and community organisations taking up the baton – to the point where it has now been adopted by George Osbourne and made compulsory from this April 2016.

Businesses and organisations should make sure that the new compulsory Living Wage is clearly visible on their financial radar, and budget accordingly.  Although it will only apply to those employees aged 25 and over, if affected, there will be a significant impact in terms of cost for most SMEs.  The key is to make sure you are organised, prepared and ready for it.