From 1 April 2021, there will be increases to both the National Minimum Wage (NMW) and the National Living Wage (NLW). Eligibility for the NLW will also be extended to include workers aged 23 years old and over. There are also new record-keeping requirements to be aware of.
During his budget delivery, the Chancellor confirmed that the minimum wage for all age brackets will benefit from an increase, including the apprenticeship rate. The accommodation offset rate will also increase. Some 23 and 24 year olds will see a welcome pay rise of almost 9%.
What are the changes to the new National Living Wage?
The NLW is the minimum hourly rate of pay workers aged 25+ currently receive. The present NLW rate is £8.72 per hour. From 1 April, this will jump to £8.91.
From the beginning of April, workers aged 23 and 24 will also become eligible to receive the new NLW rate of pay, with this representing a 8.7% increase from their current NMW rate of £8.20 per hour.
What are the new National Minimum Wage rates for other age groups?
- 21-22 year olds will receive £8.36 per hour (up from £8.20)
- 18-20 year olds will receive £6.56 per hour (up from £6.45)
- 16-17 year olds will receive £4.62 per hour (up from £4.55)
- The Apprentice rate will be £4.30 per hour (up from £4.15)
- Accommodation offset will be £8.36 per day (up from £8.20)
What does this mean for employers?
The government has recently resumed its “name and shame” approach for employers who fail to adhere to the minimum rates of pay. To avoid non-compliance, employers should begin preparing for payroll changes now and should also be identifying the workers that will be moving between bands, including those who will now be eligible to receive the new NLW.
New record-keeping requirements
From 1 April, there will also be changes to employers’ record-keeping obligations. Employers are now required to keep records verifying their compliance with the applicable NMW rates for a period of six years (previously this was three years). Employers should also be aware that this three-year extension will apply retrospectively to any records kept immediately prior to 1 April.