Back in November 2023, the UK Government announced it was accepting the Low Pay Commission’s recommendations on a National Minimum Wage increase. In this blog, I will help to guide employers through managing the effects of the largest-ever minimum wage increase…
The Department for Business and Trade (DBT) estimates that the changes will affect around 2.7 million workers who will receive a pay rise worth £1,800 a year for a full-time worker. As well as the financial impact, there are also other changes that employers need to be prepared for.
What are the changes?
Effective from April 1, 2024, the National Minimum Wage (also known as the National Living Wage) will apply to all workers aged 21 and over. Previously the set hourly rates only covered those aged 23 and over.
The new hourly rates are listed below:
- 21 and over – £11.44 (increase of £1.02)
- 18-20 – £8.60 (increase of £1.11)
- 16-17 and apprentices – £6.40 (increase of £1.12)
- The accommodation offset will be £9.99 per day (an increase of 89p).
The impact on employers
In the context of the ongoing cost of living crisis, I recommend that my clients view the National Minimum Wage increase as a positive development for millions of workers. However, businesses, particularly those in the hospitality and care sector, are likely to face challenges in managing the increased employment costs.
To prepare for the upcoming increases, businesses should calculate their staffing costs using the new minimums. This needs to be done ahead of the changes to assess the impact on overall profitability, and whether adjustments to budgets are needed. For example, do you need to revise pricing structures or explore cost-cutting measures?
Whether you employ one person or 100 staff members, making early preparations can help businesses navigate these changes and mitigate any financial consequences.
Review your workforce and wages
To ensure compliance with the National Minimum Wage legislation, I urge employers to fully understand the changes so that they correctly pay their employees according to their age and employment status. Now is a good time to review the pay status of your workforce and to adjust salary/pay accordingly. Your calculations need to include basic pay, bonuses, commissions, benefits and certain allowances.
What are the penalties for non-compliance?
Non-compliance with the regulations is taken extremely seriously by HMRC. In 2023, more than 200 companies were named and shamed for National Minimum Wage breaches, with fines amounting to around £7 million being ordered to be repaid to workers.
Need professional advice?
If you need assistance in calculating the impact of the National Minimum Wage increase on your business, I can help. As an experienced HR consultant, I help to ensure businesses of all sizes stay compliant and prepared for any upcoming legal changes
JT HRConsultancy is an established HR services company based in Bedfordshire with clients across the UK. If you need help of advice on an employment issue, call me on 07715 026128 or email email@example.com