National minimum wage
You may remember that the Low Pay Commission reported to government back in Autumn 2019 and recommended increases to the national minimum wage and national living wage. The national living wage is the minimum pay required for workers who are aged 25 and older. It is a legal requirement to pay the national living wage where it applies rather than a choice.
From April 2020, these changes to minimum hourly rates will come into effect:
- NLW for workers age 25 and over – from £8.21 to £8.72 per hour;
- NMW for workers aged between 21 and 24 – £7.70 to £8.20;
- NMW for 18-20 year olds – £6.15 to £6.45;
- NMW for 16 and 17 year olds £4.35 to 4.55;
The NLW is expected to rise to £10.50 per hour by 2024. There are also plans to reduce the age at which the NLW applies from 25 to 23 by 2021, and to 21 within 5 years.
These pay rises, all of which are well over inflation, will add up. They will have a particular impact on small employers, especially in a time of economic uncertainty. The Federation of Small Businesses has said the wage hikes might result in lower recruitment, cancelled investment plans and redundancies. The BBC reports that businesses have urged the government to reduce costs elsewhere. Look out for further developments.