The government has confirmed that they will be accepting all recommendations from the Low Pay Commission. This news comes despite earlier rumours that the minimum wage would be frozen. Crucially, the National Living Wage will increase by 2.2 per cent. It will also be extended to those aged 23 and 24 for the first time, meaning those in this age bracket will see their salaries increase by nearly 9%.
What are the new National Minimum Wage Rates?
The national minimum wage (NMW) applies to all workers and is paid at different rates according to age. There is a separate rate for apprentices, and a National Living Wage (NLW) applies to workers aged 25 and over. The current and future rates for the minimum wage (which represents gross pay) are as follows:
*From 2021, the NLW will be extended to cover all adults aged 23 and above.
Action Points for employers:
- Please ensure your payroll team carry out checks to ensure your staff are being paid at least in line with the rates above.
- It is also key to ensure, with the age banding changing, that both salaried and those who are part-time who are affected are not overlooked.
- Salary sacrifice -It is also recommended to check any salary sacrifice arrangements as these cannot bring an employee under the National
- Minimum Wage. We would also suggest that it is good practice to review pension contribution percentages to ensure that the basis for their calculations takes into account the new rates.
If you need further advice on this, please get in touch.
*This update is a general summary of the current guidance in England and is up to date at the time of publishing.
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