No doubt you will have already heard the announcement to increase the National Living Wage (NLW) to £11.44 per hour, amounting to an uplift of almost 10%. This comes after the Government confirmed their acceptance of the recommendations made by the Low Pay Commission to increase National Minimum Wage (NMW) and National Living Wage (NLW) rates from early April 2024. The agreed increases are substantial, so it’s important to reflect fully on the impact this may have for employers and businesses across the UK.
Along with the rate increase, eligibility for the National Living Wage (NLW) has been extended, applying to all workers aged 21 and over for the first time from April 2024. This change means a larger proportion of the UK workforce will soon be entitled to receive the highest rate of legislated pay.
For clarity, the new rates of pay will be as follows.
|NMW from 1st April 2024
|National Living Wage (21 and over)
|18 – 20
|£9.99 (per day)
With the current cost of living crisis there is no doubt the increase will be a welcome change for many employees, helping to bridge the gap considerably in favour of the voluntary ‘Living Wage’.
However, it’s important employers start planning ahead now and consider the implications for their individual businesses. With circa three million people in the UK expected to be affected, there is a significant likelihood that payroll costs for many employers will be elevated in the near future. In addition, the inclusion of a wider number of people in the highest category of pay will naturally increase those earning above the pension threshold, meaning employers will need to consider carefully how this impacts their current auto-enrolment and pension provisions.
NMW Checklist. How you can stay ahead of the changes and ensure compliance…
- Analyse the implications and affordability of increased payroll costs well in advance
- Consider wider costs which may be applicable, including increases in employer pension and national insurance contributions, as a result of this change
- Check regularly that your payroll information and records are up to date
- Keep records relating to pay for at least 6 years if they were created after 1st April 2021
- Set a calendar reminder in advance to check your team members’ ages and ensure they are scheduled to be paid in the correct age bracket
- Advise team members in writing of the upcoming change to their hourly rate
- Remember when calculating holiday pay from April 2024 to use the updated figures
- Contact AAB People for additional support wherever required
We understand navigating these changes may be challenging for your business, so please don’t hesitate to contact James Richardson, Frances Wood, or your designated consultant at AAB People if you require any additional clarification, information, or support.