It’s important for employers to note that National Minimum Wage and the National Living Wage rates increase on 1st April 2024, so they’ll need to ensure that the business and payroll is ready for this change.
Along with the new rates for employees of different ages, the National Living Wage will start to encompass more employees, with it being extended to those aged 21 and over from 1 April 2024, when it previously applied only to those over the age of 23.
While the rates are always reviewed and increased annually, the rate increases in 2024 are substantial, as announced in the government’s Autumn Statement in 2023, due to the high level of inflation at the time when the rise was calculated.
The new rates from 1 April 2024 are:
- National Minimum Wage (Apprentice rate): £6.40 per hour
- National Minimum Wage (16-17 years old): £6.40 per hour
- National Minimum Wage (18-20 years old): £8.60 per hour
- National Living Wage (21 years and older): £11.44 per hour
This may also affect employers who pay an annual salary to their employees rather than hourly pay, as they will need to ensure that the salary paid is at least the minimum rate for the number of hours worked.
The minimum annual salaries (based on 40 hours worked per week) from 1 April 2024 are:
- Apprentice (first year of apprenticeship) – £13,312.00
- Aged 16-17 years – £13,312.00
- Aged 18-20 years – £17,888.00
- Aged 21 or older – £23,795.20
What do employers need to do to make sure they are ready for the change to wage rates?
In order to make sure that your business is compliant with these changes, you should:
- Check your payroll solution to ensure that the changes have been made. You might use a payroll service provider (which will usually mean that no action is needed as they should be on top of the changes already) or you might run payroll yourself using software.
- Review the fixed salaries for all of your workers to ensure that they are compliant with the changes.
- Check your pensions software to ensure that any necessary changes have been made for contributions that are affected.
- Communicate with your employees to let them know about the salary increase (if applicable).
- Update your employment records with any salary increases.
- If you are currently recruiting, ensure that any roles being advertised are compliant with the new rates.
- Consider whether any other roles that are above minimum rates will need to be increased too. For example, if a management role will now be paid at a similar level to junior employees, you may need to increase the salary of management staff too.
If a business fails to make any changes in time for the changes on 1 April 2024, they could face serious penalties from HMRC, along with reputational damage.
If you’d like any assistance with your payroll, we can help to take this burden and ensure that you’re compliant with all of the rate changes coming into effect in 2024 and beyond. Get in touch to find out more.