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National Minimum Wage changes set for April 1st: What employers need to know to be prepared
10th March 2021
The weather is improving, Easter is around the corner and Chancellor Rishi Sunak has delivered the Budget.
Welcome to March, a month that starts and ends with long-standing traditions, namely the Chancellor posing with an outstretched arm holding a big red briefcase and people eagerly awaiting chocolate eggs.
While the latter is definitely good news, how will the Chancellor’s decisions impact employers and the lives of people already feeling the impact of the coronavirus pandemic and a seemingly never-ending 12 months of virtual lockdown?
Workers aged 23 or 24 are set to benefit the most - at present the National Living Wage is the minimum payment for employees aged 25 or over. However, from April 1st the age restriction will lower to 23 or over.
Basic rate workers will get an increase of 2.2% with the National Living Wage rising to £8.91 an hour – a jump of 71p for those 23 and 24-year-olds currently on £8.20.
The National Minimum Wage – for those aged 16 and over - will also rise from April, Sunak stated: “Taken together, these minimum wage increases will likely benefit around two million people.”
From April 1st 2021, the National Minimum Wage and National Living Wage rates are as follows:
- 16 to 17-year-olds: Rates will increase from £4.55 to £4.62 per hour (increase of 1.5%).
- 18 to 20-year-olds: Rates will increase from £6.45 to £6.56 per hour (increase of 1.7%).
- 21 to 22-year-olds: Rates will increase from £8.20 to £8.36 per hour (increase of 2%).
- Aged 23 or over: Rates will rise to £8.91 per hour
The increase equates to a pay rise of 19p an hour for basic rate workers, down from the 49p an hour increase promise made 12 months ago.
Apprentices are also set for a timely boost with rates set to increase by 3.6% from £4.15 to £4.30 per hour.
As always, there are a few rules to follow with apprentices only entitled to the rate if they are either aged 19 or under, or aged 19 and over and in their first year of apprenticeship.
It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to fake payment records, so it’s vital you pay full attention and be fully compliant with the rises.
A few steps to avoid falling foul of the latest changes are:
- Check who is eligible for what within your organisation
- Keep up to date records of payments to employees
- Use the National Minimum Wage and National Living Wage calculator
- Ensure staff are aware of the pay rise in advance
For more details and guidance on the National Minimum Wage and National Living Wage, visit: https://www.gov.uk/national-minimum-wage-rates
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