Parliament has been considering the Draft National Minimum Wage (Amendment) Regulations 2022, which implement the National Living Wage (NLW) and the National Minimum Wage (NMW) rates increases as of 1 April 2022. These changes are in line with the recommendations put forward by the Low Pay Commission (LPC) and accepted by the government in October 2021.
By way of reminder, the NLW is the lowest amount that can legally be paid to workers who are 23 or over. This should not be confused with the “real living wage” which is an amount independently calculated by the Living Wage Foundation (a campaign group) based on what it considers employees need to earn in order to get by. The real living wage is voluntarily paid by some UK businesses, but is not mandatory.
The changes in rates to NMW and NLW are set out in the table below and will come into force from 1 April 2022.
|Category||Current rate (valid until 31 March 2022)||Incoming rate (from 1 April 2022)|
|Age 23 or over (NLW)||£8.91||£9.50|
|Age 21 to 22||£8.36||£9.18|
|Age 18 to 20||£6.56||£6.83|
|Age 16 to 17||£4.62||£4.81|
|Accommodation offset amount||£8.36||£8.70|
It was also confirmed that the government has accepted the LPC’s recommendation to remove the NMW exemption for live-in domestic workers and such workers should be paid the NMW in the same way as other workers. Legislation to remove the exemption will be introduced in due course.
The significant increases to NLW and NMW from April 2022 will mean that NMW legislation could become relevant to even more employees than usual. Employers should remember that NMW is not just relevant to workers who are paid by the hour, but must also be considered in respect of employees who earn a salary. The higher rates could bring more salaried employees close to the NMW once the increase is implemented. Employers will also need to be mindful of other factors, which could cause an employee to fall below the NMW or NLW, such as salary sacrifice schemes and payments being delayed by more than one pay reference period.
Employers should remember that if they do not comply with NMW or NLW legislation they face HMRC investigation, prosecution and being “named and shamed” by the government.