The National Minimum Wage
The National Minimum Wage was introduced in 1999 and is increased annually in April.
It is set by the independent Low Pay Commission which, each year, recommends what the minimum wage should be. Its recommendations are usually (but not always) followed.
With 2022 seeing inflation returning to levels not seen since (approx.) 1980, the Chancellor announced in the Autumn Statement 2022 that the National Minimum Wage would increase from 1 April 2023 by between 9.7% and 10.9% across the various categories.
It was widely acknowledged that this was part of the Government’s plan to help lower-paid workers deal with the rapidly increasing cost of living.
With this action, the National Minimum Wage now stands at almost 60% of average earnings, having risen from 42% in 1999. The Government has a ‘target’ of it equating to 66% of average earnings by the end of next year; so expect rises to be greater than average wage increases in 2024.
From 1 April 2023, the new rates will be:
Age 23 or over: £10.42
Age 21 to 22 – £10.18
Age 18 to 20 – £7.49
Age 16 to 17 – £5.28
Apprentice – £5.28
The National Minimum Wage is a legal requirement that all employers must adhere to, subject to certain allowances, which you can find out about in the “Who does not have to be paid the National Minimum Wage?” section on our website.
Minimum Wage or Living Wage
Whilst the National Minimum Wage is a legal obligation, some (mostly larger) businesses choose to pay the ‘Real Living Wage’ which is set by the Real Living Wage Foundation.
The ‘Real Living Wage’ is voluntary, and currently stands at £10.90 outside London and £11.95 for those working in the Capital.
What do you need to do?
Firstly, you need to review your workforce and ensure that any existing minimum wage employees have their hourly rate updated with effect from 1 April (don’t forget to let us know if we run your payroll for you).
Secondly, you will also need to apply the new rates to new starters and to any team members who pass through one of the age-related thresholds indicated above - so make sure your procedures‘ capture’ all affected.