Prior to the New Year, the government confirmed several increases to the existing national minimum wage (NMW) rates that will be introduced in April.
The existing structure, which provides separate hourly rates to staff based on separate age categories will remain intact and individuals will benefit from an hourly increase of between 4.6 and 6.5 percent, depending on their age. These new rates are as follows:
- National Living Wage for ages 25 and above - £8.72 (6.2 per cent increase)
- 21 to 24-year-olds - £8.20 (6.5 per cent increase)
- 18 to 20-year-olds - £6.45 (4.9 per cent increase)
- Over CSA to 17 - £4.55 (4.6 per cent increase)
- Apprentices under 19, or 19+ but in first year of apprenticeship - £4.15 (6.4 per cent increase)
In real terms, this should equate to an increase of around £930 a year for a full time worker who is paid in line with the National Living Wage.
It is also worth remembering that the hourly rates associated with voluntary ‘Real Living Wage’ underwent a similar increase in November 2019, meaning committed organisations are now required to pay staff the enhanced rates of £10.75 per hour in London and £9.20 for the rest of the UK.
In the lead up to April, organisations should work with their payroll department to ensure the new hourly rates are reflected in staff salaries, starting from the relevant pay reference period. Given the different age categories it is imperative that organisations double check information on employees’ dates of birth ahead of time to ensure this is correct.
For clarity’s sake, organisations should also notify staff of the pay rise ahead of time with written confirmation. This transparency is likely to be well received and could help build positive employee relations.
Failing to implement these new rates on time will place organisations in breach of national minimum wage law and could also lead to significant reputational damage.