Important Employment Information Regarding
the New National Living Wage
It’s April soon, and the start of the new tax year. We know that the fresh tax year can often bring confusing law changes that are difficult to get your head around – and that’s why we’re here to help. At PureKat Consultancy, we are dedicated to making a conscious effort to keep ahead of important employment news, in order to be able to accurately advise our clients on regulations and get our candidates the fairest wage possible.
In important employment news, this tax year brings about a significant increase in both the National Living Wage and the National Minimum Wage. First revealed by the government in November 2020 as part of their commitment to ending low paid jobs, and confirmed in last month’s budget, these minimum wage increases are expected to apply to and benefit two million people across the nation.
From April 1st, the National Living Wage is rising by 19p to £8.91 per hour, an increase of 2.2%. For a full time worker of 23 years or older, that’s equivalent to an extra £345 per year! In other big news, for the first time the age from which workers become eligible for the national living wage will reduce from 25 to 23 years old. This means that 23 and 24 year olds who are currently on £8.20 an hour will experience a jump of 71 pence an hour up to £8.91! For those workers falling within the new threshold, that’s an incredible wage increase of 8.7%! The National Minimum wage will also rise next month, meaning an increase in pay for those 16 and over, and will see apprentices earning at least £4.30 per hour.
If you have employees that are earning at this level, it’s important that you take action now to ensure that you’re compliant with these new rates. For any employees who are eligible for an increase to their pay due to these changes, you will need to document this wage rise in an amendment to their contractual terms of employment from April 1st.
There are also changes being introduced in regards to record keeping. From April 1st, the period in which employers are to retain employment records as evidence establishing that they pay workers at a rate equal to the National Living Wage will be extended from three years to six years.
National Living and Minimum Wages from April 1st, 2021
Rate for workers aged 23 and older
2.2% increase from £8.72 to £8.91 per hour
Rate for workers aged 21 and 22
2% increase from £8.20 to £8.36 per hour
Rate for workers aged 18 to 20
1.7% increase from £6.45 to £6.56 per hour
Rate for workers aged 16 and 17
1.5% increase from £4.55 to £4.62 per hour
Rate for apprentices
3.6% increase from £4.15 to £4.30 per hour
What is the National Living Wage?
The National Living Wage is the minimum rate that employers are allowed to pay workers per hour, set by the government. Introduced by the New Labour government lead by Tony Blair in 1999, it was originally known as the national minimum wage. In 2011, the campaign group The Living Wage Foundation was founded in order to try and persuade employers to voluntarily pay a higher minimum wage – what they called the “national living wage.” This was an independently calculated wage that estimated the rate workers needed to cover all their basic needs – and was notably higher than the national minimum wage set by the government. In the 2015 budget, George Osborne rebranded the national minimum wage as the National Living Wage, where it has applied to all workers 25 and over – though it didn’t yet match the recommended rate set by the Living Wage Foundation.
For Our Clients – Be Aware – Avoid Minimum Wage Underpayment
Between 2016 and 2018, national wage underpayments by UK employers totalled a huge £6.7 million, with some household names included in the culprits. The HMRC imposed over 1,000 penalties worth a total of £17 million for underpayment in 2019 alone, so it’s essential that you’re paying all employees the correct amount.
The government Department for Business, Energy and Industrial Strategy has published a list of the main causes of minimum wage underpayment in order to help employers avoid these common pitfalls. These include:
- Making wage deductions from workers for expenses connected with the job
- Making wage deductions for the employer’s own benefit
- Failure to pay for an additional time added onto shifts, for example for handovers or security checks
- Failure to pay a worker for any time during their shift when they are at the workplace and required to be available for work
- Failure to pay for any travelling time
- Failure to pay for any time spent training
- Failure to apply the annual increase to minimum wage rates that come into effect on April 1st
- Failure to distinguish between different types of worker – for example salaried, contracted
If you have employees that are earning at this level, it’s important that you take action now to ensure that you’re compliant with these new rates. Please be particularly careful and bear in mind the new age qualification of 23 years for the National Living Wage, as you may have a number of employees that now qualify for the higher rate. If you have any questions, please get in touch and we’ll do our best to advise or signpost you to the relevant organisation. For any immediate questions, you may wish to contact the Acas helpline on 0300 123 1100 Monday to Friday 08:00 – 18:00 for free, impartial and confidential advice.
For Our Candidates
PureKat Consultancy take our responsibilities within the recruitment industry to heart, and adhere to the Recruitment and Employment Confederation (REC) code of professional practice. We will always endeavour to ensure that any job position we put a candidate forward for strictly complies with the National Living Wage or National Minimum Wage, dependent on age and job type.
The PureKat Promise
At PureKat Consultancy, we pride ourselves on our professionalism and rectitude, and it is always of the utmost importance to us that we’re up to date with the government’s rules and regulations regarding employment. We know this is a lot of information to take in, and if you’d like to get in touch to discuss any questions or queries, please feel free to give us a call or drop us an email and we’ll do what we can to make employment easy for you.