The National Minimum Wage is increasing this April and will come as welcome news to many employees who are feeling the pinch from the current cost of living crisis.
Here’s everything HR teams need to know:
What is the National Minimum Wage?
The National Minimum Wage is the minimum hourly rate businesses can pay an employee in the UK.
The amount is constantly reviewed by the government in line with the cost of living and is based on advice from the Low Pay Commission (LPC), which takes into account recommendations from businesses and trade unions.
The government has announced over a 9% rise to National Minimum and National Living wages, which will take effect from 1st April 2023. Full-time workers can expect to receive nearly £150 more each month.
National Minimum Wage vs. National Living Wage: What’s the difference?
The main difference between the National Minimum Wage and National Living Wage is what workers are entitled to, based on their age and in some cases, apprenticeship status.
National Minimum Wage (NMW)
Almost all workers are entitled to the National Minimum Wage, including full-time, part-time, casual and agency workers.
There are a few exceptions, including self-employed people, volunteers and when the employer’s family members are living in their home.
National Living Wage (NLW)
The National Living Wage is higher than the NWM and is the minimum hourly rate employers must pay workers who are aged 23 and over.
HR teams should note the minimum age will be reduced from 23 to 21 years old by 2024, as a result of advice from the Low Pay Commission.
National Wage increases on 1st April 2023
The government has announced over a 9% rise to National Minimum and National Living wages, so it is important to ensure your staff’s wages are increased accordingly.
From 1st April 2023, the National Living Wage will go up from £9.50 to £10.42 and the National Minimum wage will be:
- Age 23 or over – £9.50 rising to £10.42
- Age 21 to 22 – £9.18 rising to £10.18
- Age 18 to 20 – rising from £6.83 to £7.49
- For workers under 18 who are no longer of compulsory school age – rising from £4.81 to £5.28
- Apprentices under 19, or over 19 and in the first year of the apprenticeship – rising from £4.81 to £5.28
The new 2023 rates are the same across Scotland, Northern Ireland, Wales and England and will come into effect on the same date everywhere.
All employers have to pay the correct minimum wage, no matter how small the company.
How businesses benefit from increasing the minimum wage
Attract top talent
Offering better salaries will help your business attract top talent and stand out in a crowded recruitment market.
Reduce staff turnover
Increasing your staff’s wages will help to improve morale, job satisfaction and reduce staff turnover.
Boost your reputation
Offering good wages will improve perceptions of your company. This not only ties in with attracting top talent and retaining staff, but demonstrating a fair working environment will put you as a front runner for new business opportunities and encourage customer loyalty.
Get on top of salaries with HR Planner
HR Planner makes it easy for SMEs to stay on top of employee pay. Our salary tracking feature means you can quickly record changes in pay to support any changes that need to be made following the National Minimum Wage increase.
For a free demo of our all-in-one, industry leading UK HR system, call our expert team on 01252 636070 or email support@hrplanner.uk.