Are you paying your carer enough? The latest National Living Wage rates

Are you paying your carer enough? The latest National Living Wage rates

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The rate for the National Living Wage (NLW) increased on 1st April 2020. The new rates equate to a 6.2% pay rise for workers over the age of 25. That’s a jump from £8.21 per hour to £8.72 per hour. For a full-time, over-25 worker, this is an annual pay rise of £930 making it the biggest cash increase applied so far to the NLW.

If you employ your own paid carer, you need to ensure you’re paying at least the National Living Wage. For someone under the age of 25, the National Minimum Wage (NMW) applies instead. As an individual employer, you need to check you are always paying your carer enough by law.

Using a Payroll Service (such as the one offered by You’re the Boss) can help you to keep your payments to your carer on track. Payroll services liaise with HMRC on your behalf and can advise on changes to payment amounts. That means when the NLW or NMW increases each year, your payroll provider will calculate any changes,

If you contract with an agency or other care provider, you might find your fees go up if their rates increase to reflect the new NLW and NMW.

The April 2020 rise means the Government is on track to meet its target of setting the National Living Wage at 60% of median earnings this year. It’s thought that nearly 3 million workers will benefit from the increase. According to the Chancellor of the Exchequer, Sajid Javid, the NLW should increase to £10.50 by 2024, based on current forecasts. The increased rates are recommended by the Low Pay Commission, an independent, advisory body.

What’s the difference between the National Minimum Wage and the National Living Wage?

Essentially, there is no difference between the NMW and the NLW. The National Minimum Wage is set annually by the government, and updated every April. The NMW applies to any worker over school leaving age.

The NMW does not apply to self-employed people running their own business. If you contract with a self-employed paid carer, they may choose to increase their rates, but this process should be in your contract with them. The NMW also does not apply to company directors, volunteers or family members of the employer living in the employer’s home.

The National Living Wage was introduced in the Summer Budget 2015, and came into law on 1st April 2016. It is in essence just a new name for the National Minimum Wage, though it only applies to those over the age of 25. However, it doesn’t reflect the true cost of living. It’s based instead on a proportion of the median level of earnings.

How much you should be paying your carer is dependent on their age. The current rates are as follows (correct as of 1st April 2020).

25 and over 21 to 24 18 to 20 Under 18 Apprentice
£8.72 £8.20 £6.45 £4.55 £4.15

 

For more information on the rates, and to view previous rates, visit the government website.

What about the Real Living Wage?

As we’ve said, the National Living Wage doesn’t reflect the true cost of living. The Living Wage Foundation sets out the recommended Real Living Wage, which accounts for the amount people need to get by.

Many individual employers choose to offer their carers the Real Living Wage, but you’re only legally required to offer the National Living Wage. As an employer, you could face a fine of up to £20,000 per employee if you pay less than the NMW/NLW. Our Employing Your Own Paid Carer booklet, outlines your responsibilities as an employer.

  • Published on Aug 12, 2020

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