Young smiling female technician in blue uniform

Quite apart from what else we see coming from the Chancellor’s Autumn Statement, we have had confirmation of significant increases and changes to the National Minimum (NMW) and National Living Wage (NLW) rates.

What are the increases?

Category Current rate New rate Increase (£/%)
NLW: 21 and over £10.42 £11.44 £1.02/9.8%
NMW: 18 – 20 £7.49 £8.60 £1.11/14.8%
NMW: 16 and 17 £5.28 £6.40 £1.12/21.2%
Apprentice rate £5.28 £6.40 £1.12/21.2%
Accommodation offset £9.10 £9.99 £0.89/9.8%

 

These are the largest ever cash increases we have seen to minimum wage and are consistent with the Government’s previously stated position to raise the minimum wage. Whilst they are undoubtedly going to be welcome for the lowest paid workers in society, they will also hit businesses at a time when the economy remains uncertain. In making their recommendations, the Low Pay Commission have attempted to strike that balance but it remains to be seen where the impact will be most keenly felt.

Is there anything else to note about the announcement?

For the first time, the top rate (NLW) will apply to workers aged 21 and over. Previously that rate applied to those aged 23 and over. The Low Pay Commission have indicated that they believe we should move towards an adult rate which starts at 18 but more will be said on that in due course.

The percentage increases are clearly greatest for younger workers and apprentices. This is an express acknowledgement of the importance of the youth labour market in society, that younger workers are more likely to be fulfilling roles paying NMW only and therefore to seek to address some of that pay inequality in the wider labour market.

When do the new rates apply?

The new rates will take effect from 1 April 2024.

 

If the changes to the National Minimum (NMW) and National Living Wage (NLW) rates impacts your business please contact our Employment team.