Clarity regarding National Living Wage rise and Job Retention Scheme (update)

By James McAllister

- Last updated on GMT

Clarity regarding National Living Wage rise and Government's Coronavirus Job Retention Scheme (update)

Related tags: Coronavirus, Government, National living wage

The National Living Wage (NLW) increased today (1 April) by 6.2%, however, Government guidance suggests furloughed workers will not benefit from the rise, despite HMRC initially telling BigHospitality they would.

HMRC confirmed to BigHospitality ​earlier today that businesses would be able to claim for wages at the increased hourly rate for the months of April and May under the Government's Coronavirus Job Retention Scheme (JRS), which pledges to pay 80% of an employee’s regular wage up to £2,500 per month if they have been furloughed by their employer. 

However, Government guidance regarding the JRS indicates claims made under the scheme should be calculated through historic earnings, not contracted hours. 

It states: "Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

"Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW."

It goes on to add that if an employee had to complete an online training course whilst they are furloughed, they must be paid the NLW for the hours spent training, even if this is more than the 80% of their wage that will be subsidised.

BigHospitality ​has contacted HMRC this afternoon for further clarification regarding the issue, and will update this article accordingly once we receive a response. 

First announced at the end of last year, the NLW increase is more than three times the rate of inflation, and has previously been heralded by the Government as "the biggest cash increase ever”.

The NLW, which is only applicable to workers aged 25 and over, now stands at £8.72 per hour; while the National Minimum Wage for 21 to 24-year-olds has risen 6.5% to £8.20 per hour.

Related topics: Business & Legislation

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