Understanding the National Living Wage changes

In the latest of our new series of advice pieces from Peninsula for PiGs AKA People in Glazing Society, the team discuss moving to a single minimum wage rate, also known as the National Living Wage for adults.

Since October 2024 most of the focus has been on the Government’s Employment Rights Bill, which is progressing at speed through the parliamentary process and tipped to receive Royal Assent this summer.

However, the Bill was just one of many commitments the Government made as part of their Plan to Make Work Pay. One of the other big commitments was to bring in a single minimum wage rate for all workers over the age of 18 – currently, 18- to 20-year-olds have a lower minimum rate to 21-year-olds and over.

In the Low Pay Commission’s (LPC) 2024 report they committed to consulting on the best way to achieve implementing the single rate. And now, they have launched a consultation seeking views on how the National Living Wage (NLW) rate can be extended to cover all workers aged 18 and over.

What are the proposals?

In the consultation, the LPC outlines two potential options for lowering the age of entitlement to the NLW. These are:

• Reduce the age of entitlement by one age group at a time. First extending the NLW to 20-year-olds, then 19-year-olds, then 18-year-olds.
• Increase the 18- to 20-year-old rate faster than the NLW over a number of years until the two are aligned.

Both options would involve a significant increase in the wage floor for 18- to 20-year-olds, with the scale of which depending not only on the option taken, but on how quickly the transition is made. Although no set timeframes have been given, the LPC explore multiple timeframes with full transition completed anywhere between 2027 and 2029 – meaning it could be less than two years before all workers over the age of 18 are paid the same NLW rate.

What do they want to know?

In order to achieve the extension of the National Living Wage, the LPC are seeking evidence and views on various areas including:

• the impact of reducing the age threshold for the NLW
• any benefits or risks associated with either option
• views on the pace of the transition
• the impact on the gap between the 16- to 17-year-old rate and the 18- to 20-year-old rate.
• how the impact of the transition should be evaluated

The consultation, which is also seeking input to shape the LPC’s recommendations on minimum wage rates for 2026, closes on 30 June 2025. Whilst there is no immediate change, it is clear this is another commitment the Government intends to progress at pace.

Those wishing to respond should do so via the online consultation platform or via e-mail to lpc@lowpay.gov.uk.

Peninsula is a leading provider of Employment Law, Human Resources (HR), and Health & Safety consultancy services and today supports more than 30,000 businesses of all sizes across the UK and Ireland, alongside branches in Australia, New Zealand and Canada.

Contact Mark Witcomb, Regional Sales Manager from Peninsula by email or call on his mobile 07800 918679 for more information about how Peninsula can benefit your business.