Largest ever national minimum wage increases coming in 2024
Yesterday the government announced it has accepted the Low Pay Commission’s recommendations on minimum wage rates to apply from 1 April 2024.
This is the largest ever increase to the minimum wage in cash terms and businesses will need to prepare early for the increased employment costs.
For the first time, the National Living Wage will apply to all workers aged 21 and over, previously applying only to those aged 23 and over.
What’s the new National Minimum Wage from 1 April 2024?
The annual increases to the minimum wage and national living wage with effect from 1 April 2024 are as follows:
- 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 £9.99 per day (increase of 89p).
Our thoughts on the increases
With the ongoing cost of living crisis, the increases to National Minimum Wage is a positive for millions of workers across the UK. However, with businesses struggling for cash and with a recent report suggesting that the number of companies going bust this year is on track to be the highest since the financial crisis in 2009, managing the increased employment costs is going to be a challenge for many businesses, particularly those in the hospitality and care sector.
Our advice to business owners is to prepare early for the increases, calculate your staffing costs using the new minimums and consider your profitability. Do you need to increase your prices or look at cutting costs elsewhere? By preparing early, the increases should hopefully not come as a shock or cause a knee-jerk reaction.
How do I comply with National Minimum Wage?
It’s essential to understand how the National Minimum Wage is calculated to avoid unintentional violations.
As an employer, you must be aware of the NMW rates and ensure you are paying your employees according to their age and employment status, including updating salary/pay when these as changes occur.
To calculate the National Minimum Wage, it is important to understand the elements that can be included in the calculation. Basic pay, bonuses, commissions, and even some allowances count towards the NMW, whereas tips, service charges, and premium payments do not.
By accurately accounting for these factors, you’ll be confident that you’re complying with the NMW legislation.
You can read our full article to help you comply with National Minimum Wage here.
Penalties for non-compliance
HMRC takes non-compliance for incorrect payment of National Minimum Wage seriously. In 2023, it named and shamed over 200 companies for NMW breaches and ordered £5million to be repaid to workers along with fines totalling around £7million.
Advice from the experts
If you’d like to pick our brains about calculating national minimum wage for your employees or need help understanding the Working Time Regulations, book a free 1-2-1 call today with one of our team.
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