Are you ready for national living wage changes?

Are you ready for national living wage changes?

The national living wage and national minimum wage increase this April. Employers must be ready to take the additional costs into account.

From 1 April 2021, the national living wage (NLW) increases 2.2% from £8.72 to £8.91. This is equivalent of £345 extra per year for someone working full-time. These payments are currently for those aged 25 and over, but from 1 April those over 23 will be paid NLW.

This means that if you have a worker aged 23-24 years of age they will effectively receive a pay rise of almost 9%.

New national living wage rates

The new rates that come into effect from 1 April 2021 are:

  • National Living Wage (23+) to increase 2.2%, from £8.72 to £8.91
  • The National Minimum Wage (21-22) to increase 2%, from £8.20 to £8.36
  • National Minimum Wage (18-20) to increase 1.7% from £6.45 to £6.56
  • The National Minimum Wage (under 18) to increase 1.5% from £4.55 to £4.62
  • Apprenticeship Wage to increase 3.6% from £4.15 to £4.30

Make sure you put everything in place ahead of the introduction of the new rates. Any employer failing to pay the correct amount maybe investigated by HMRC.

Possible penalties 

Employers face a notice of arrears along with a penalty for not paying the correct rate of pay and face court action from HMRC, resulting in a possible fine. Courts may impose a maximum fine of £20,000 per worker.

Failing to pay the current rates can lead to employers being named publicly and company directors face a ban for up to 15 years. 

Also, employers face being taken to an employment tribunal if an employee believes they have not been receiving either the NMW or NLW. 

For full details of the changes, visit the government’s website.

For help in preparing for the new rates, you can contact us today.