Are you up to speed on the changes to the National Living and National Minimum Wage coming in April 2024?
The Government has recently accepted the recommendations of the Low Pay Commission and announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2024.
Bryan Sanderson, chair of the Low Pay Commission, said their recommendation to increase the NLW to £11.44 demonstrates an effort to navigate “a high degree of political and economic uncertainty“.
Currently, the NLW applies to those 23 and above. However, from April 2024 the NLW will expand to include 21- and 22-year-olds.
The NLW will increase by 9.8% from the current £10.42 per hour to £11.44 per hour. For a full-time employee working 37.5 hours per week this equates to a minimum annual salary of £22,308.
Younger employees and apprentices will also see significant pay increases from April 2024, with 18–20-year-olds hourly pay set to increase to a minimum of £8.10 per hour. Additionally, 16–17-year-olds and apprentices will see their pay increase to a minimum of £6.40 per hour which is a huge 21.2% increase from the current minimum in this bracket.
These substantial increases demonstrate an acknowledgement of the tough economic climate, and the challenges employees are facing during the ‘cost of living crisis’. The Recruitment & Employment Confederation’s Deputy Chief Executive, Kate Shoesmith, stated that this rise “rightly takes into account both cost of living increases and the slow path of pay growth over the last decade or so. It will be a challenge for some employers to adapt“.
However, employers should pause to consider the impact that this may have on their business finances and pay structures. An increase to the lowest paid roles can create pressure on the whole pay structure of an organisation, decreasing the differential between an entry level role and first line management, for example. In some instances, a significant salary increase could result in an entry level role overtaking the first line manager.
We would recommend that all organisations undertake a pay audit to scope the impact that these changes will have on their current pay structure at the earliest opportunity to prepare for April 2024.
At Narrow Quay HR, we are experienced in completing pay audits, pay reviews and if necessary, organisational restructures. For an informal discussion on how we could support you ensure your practices remain in line with the statutory requirements and suit your business strategy, please contact Kathryn Chidzey-Jones in our team on 07881 092524.
