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Major increases in minimum wages rates

Minimum Wage Increase Ahead Warning Sign

From Monday 1st April 2024, the National Living Wage that will apply to all employees aged 21 and over will go up to £11.44 per hour. This is an increase of nearly 10% from the previous National Living Wage.

Another key change is that this will now apply to workers aged 21 and over rather than those who are 23 and over. For employers who have been employing a 21-year-old or 22-year-old on minimum wage terms, this will be a very significant hike.

It is worthwhile looking at the rates that apply to different categories of workers, particularly as minimum wage laws are far from straightforward.

For employees who are aged 16 or 17, the National Minimum Wage from 1st April 2024 will be £6.40 an hour, which is an increase of £1.12 per hour from the previous rate. For employees who are aged 18, 19 or 20, the National Minimum Wage will be £8.60 per hour, which is an increase of £1.11 from the previous rate.

For an apprentice who is under 19 or an apprentice over 19 in their first year of apprenticeship, the new hourly rate will be £6.40, which is an increase of £1.12 per hour.

Entirely separate from the above rates, which are legal requirements, there is the concept of the Real Living Wage. This is an unofficial hourly rate which is overseen by the Living Wage Foundation charity and is based upon the amount that the charity believes people need to earn.  For workers in London, the London living wage is calculated at £13.15 an hour and for the rest of the UK, it is £12 an hour.  Some employers proudly claim to pay the Real Living Wage and if they wish to continue to abide by this claim, they will need to ensure that they keep up with these hourly rates of pay.

In times of economic hardship on people’s personal finances, it is surely to be welcomed that the lesser paid members of society are receiving increases in line with or above the rate of inflation. However, this may have some unintended consequences in terms of job security, particular for younger workers, including those who are now eligible for the National Living Wage when previously they were only entitled to the National Minimum Wage for younger workers. The cost to an employer in employing these individuals may become prohibitive in certain sectors and the individuals may find themselves at risk of redundancy.

As well as the increases in the National Living Wage and the National Minimum Wage, the statutory cap on a week’s pay for certain employment law purposes will also increase significantly from 6th April 2024.

This is the figure that is used to calculate a maximum week’s pay when somebody is made redundant or has a claim in an employment tribunal. It is the maximum amount that could be applied to a week’s pay.

It is currently £643 a week but will increase to £700 a week from the 6th April 2024. One effect of this will be that employees bringing claims to an employment tribunal or employees being made redundant, where dismissal occurs from 6th April 2024 onwards, will have potentially higher awards than they might otherwise have had.

All of the above factors make it all the more important for employers to ensure they comply with employment laws, as the cost of failing to do so could increase substantially.