On 17 November 2022, the UK Government confirmed in its Autumn Statement that it has accepted the Low Pay Commission’s proposed increases to the national living wage (NLW) and national minimum wage (NMW) rates from 1 April 2023.
About the National Minimum Wage (NMW)
The national minimum wage (NMW) is a prescribed minimum hourly rate of pay which employers must legally pay to most of their workers.
There are five different rates of NMW for different age-related categories of worker:
National living wage. Since 6 April 2021 this applies to workers aged 23 or over. The NLW was initially set by the government in April 2016 at 50p above the standard adult rate, but is now a separate age-related hourly rate.
Standard (adult) rate. For workers aged 21 and 22.
Development rate. For workers aged between 18 and 20 inclusive.
Young workers rate. For workers aged under 18 but above the compulsory school age, that are not apprentices.
Apprentice rate. For apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship.
A worker is entitled to the rate that applies at the start of a particular pay reference period even if the NMW rates are changed or the worker becomes entitled to a different rate during that reference period (regulation 4B, NMW Regulations 2015).
National Minimum Wage Increases Announced for 1 April 2023
Having accepted the Low Pay Commission’s proposed increases to the national living wage (NLW) and national minimum wage (NMW) rates from 1 April 2023, the new rates from 1 April 2023 will be:
Age 23 or over (NLW rate): £10.42 (up 9.7% from £9.50)
Age 21 to 22: £10.18 (up 10.9% from £9.18)
Age 18 to 20: £7.49 (up 9.7% from £6.83)
Age 16 to 17: £5.28 (up 9.7% from £4.81)
Apprentice rate: £5.28 (up 9.7% from £4.81)
Although an increase in wages will be warmly welcomed by those currently receiving the NLW and NMW struggling to cope with the cost of living crisis, the increase announced on 17 November 2022 falls short of the Real Living Wage of £10.90 (£11.95 in London) that the Real Living Wage Foundation recommends should be paid to all workers aged 18 and over.
In contrast, in a three-year period that’s been plagued by the Covid-19 pandemic, Brexit, and the conflict in Ukraine, the combination of which has created a host of supply chain issues, driven up energy costs, and caused inflation and interest rates to soar to unprecedented levels, this average 9.9% increase in the NLW and NMW will undoubtedly impact SMEs and place an added strain on business finances that are already under significant pressure.
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The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in providing specialist advice on contentious and non-contentious employment law and HR issues. If you have any queries or concerns about how the increase to the National Living Wage and National Minimum Wage impacts you, call us on0800 612 4772, Contact Us via our website or Book a Free Consultation online.
New National Minimum Wage (NMW) and National Living Wage (NLW) Rates take effect from 1 April.
25 years +
The nationalminimumwage (NMW) is a prescribed minimum hourly rate of pay which employers must legally pay to most of their workers. The legislation which underpins the NMW is highly technical in nature and many employers have unintentionally fallen foul of the rules and have, in addition to being hit with sizeable financial penalties, have been named and shamed for underpaying their workers.
Employers must keep sufficient records to establish that workers have received the NMW and it will be presumed that the worker has not received the NMW unless the employer can prove to the contrary.
The NMW is enforced by HMRC. The enforcement measures available to HMRC include service of notices of underpayment, civil penalties, “naming and shaming”, recovery of underpayments through tribunals or civil courts, and criminal prosecution. HMRC’s policy on using these measures is set out in BEIS: NationalMinimumWage Law: Enforcement.
If you are unsure about what records you need to keep and/or how long you need to keep them don’t hesitate to contact us.
The National Living Wage, which is the statutory minimum wage for those aged 25 and over, has to rise to £8.21ph from April 2019 – which means an additional £690 annually for low paid workers.
The Low Pay Commission (LPC), which recommended the increase, have anticipated that the increase will see almost 2.4 million workers throughout the UK better off.
In addition, the Government have accepted all of the LPC’s recommendations for the following NMW rates:
• 21- to 24-year-olds will increase by 4.3% from £7.38 to £7.70 per hour;
• 18- to 20-year-olds will increase by 4.2% from £5.90 to £6.15 per hour;
• 16- to 17-year-olds will increase by 3.6% from £4.20 to £4.35 per hour;
• Apprentice rates will increase by 5.4% from £3.70 to £3.90 per hour; and
• The accommodation offset will increase by 7.9% from £7.00 to £7.55.
“The increase in the national living wage (NLW) to £8.21 in April 2019 will ensure a pay rise for the lowest-paid workers that exceeds both inflation and average earnings.
“Over the past year, the labour market has continued to perform well and the economy, while subdued, has met the criteria of ‘sustained growth’ set out in our remit for the NLW. We therefore recommended an increase in line with a path to 60 per cent of median earnings by 2020.” Said Sanderson, who is the chair of the LPC.
He added further: “We recommended real-terms increases to the national minimum wage (NMW) rates for younger workers and apprentices, as the labour market conditions for these groups remain strong. These rates will continue to rise faster than both inflation and average earnings.
“We opted for smaller increases than we recommended last year because of slightly weaker labour market conditions for young people, combined with insufficient evidence to fully understand the impact of the largest increases in a decade implemented in April of this year. However, next year’s will still be some of the highest increases on record.”
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If you are an employer who requires assistance with any of the issues raised in this blog contact us today for your free consultation 0370 218 5662.
Last week the Government announced a huge change for UK workers – Here is what you need to know:
Following on from the Budget in November 2017, Chancellor Phillip Hammond has announced that there would be an increase in the amount people will be entitled to earn in 2018.
The National Minimum Wage (NMW) is the minimum pay per hour most workers under the age of 25 are entitled to by law.
The government’s National Living Wage (NLW) is the minimum pay per hour most workers aged 25 and over are entitled to by law.
The NLW is to increase from £7.50 to £7.83 per hour while the NMW will increase as follows:-
21 to 24 year old rate from £7.05 to £7.38 per hour
18 to 20 year old rate from £5.60 to £5.90 per hour
16 to 17 year old rate from £4.05 to £4.20 per hour
Apprentice rate from £3.50 to £3.70 per hour
How can Employment Law Services (ELS) help?
If you require employment law advice on any of the issues raised in this article, or any other employment issue give us a call today on 0370 218 5662. You can also find out more about our fixed fee HR packages here and fixed fee employment law packages here, or get in touch.