Minimum Wage and Living Wage increases are coming

For business owners, April 1^st heralds changes to pay rates for all employees but especially young employees. The National Minimum Wage and the National Living Wage will increase on 1 April 2024 along with changes to who qualifies for each rate, as Martin Kerr explains.

April 2024 deadline for Minimum Wage and Living Wage increases

As a provider of Outsourced Payroll services, we have been preparing our clients for changes in the National Minimum and Living Wages. With inflationary pressures still in play, younger workers will welcome the increases in both hourly rates.

The table below outlines the new hourly rates, with the current rates also included:

Businesses will need to update their payroll systems to reflect these Minimum Wage changes, which range from 10% to 21%. Furthermore, those operating in sectors with a traditionally younger workforce such as retail, hospitality and leisure will need to consider the impact on costs and how this influences pricing and margins.

More workers set to qualify for the higher National Living Wage

A further complication is the change to when young people qualify for the higher National Living Wage. At present, the Living Wage is only applicable to workers aged 23 and over. From 1^st April 2024, this will change to employees aged 21 and over. Once again, in sectors with a high proportion of younger workers, this change will likely push more employees into the higher Living Wage bracket than employers might have anticipated.

There is good news for those completing apprenticeships with their rate of pay increasing from April 2024 also. The current rate of £5.28 per hour will increase to £6.40. To qualify for the apprenticeship rate an employee must be under 19 or 19 and over and in the first year of their apprenticeship.

The National Minimum Wage will continue to apply to apprentices who are aged 19 or over or have completed the first year of their apprenticeship. This will of course attract the new, higher rate of hourly pay.

Minimum wage non-compliance costs run into tens of millions of pounds for UK businesses

These updates combined with recent changes to the payrolling of employer-provided benefits have made for a complex start to 2024 for businesses still processing payroll in-house. Business owners should also be aware that HMRC continues to conduct minimum wage inspections.

The consequences of non-compliance can be costly in financial terms and negative media coverage. Indeed, over 500 UK companies were ‘named and shamed’ by HMRC earlier this year for failing to pay the National Minimum Wage. Cumulatively they were forced to repay over £16m to workers for underpayments and illegal deductions for items such as PPE, childcare and training.   

We are happy to speak to business owners and payroll teams about the forthcoming changes. For more information, contact John McSheffrey or learn more about our Payroll outsourcing services.   

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