National Minimum Wage Increase

The government has announced that from 1^st April 2021 the National Minimum Wage rates are increasing, and the age from which workers become eligible for the higher National Living Wage will be lowered from 25 to 23 years of age.

The National Living Wage will increase by 2.2 per cent from £8.72 to £8.91, and will be extended to 23 and 24 year olds for the first time. For workers aged under 23, there have been smaller increases in recognition of the risks to youth employment which the current economic situation poses.

Bryan Sanderson, Chair of the Low Pay Commission, who recommended these changes to the government, has explained that:

“The increase in the NLW will mean that low-paid workers’ incomes rise broadly in line with predicted wage growth; and modestly ahead of projected increases in prices, meaning low-paid workers’ living standards should be protected.”

Employers should make sure they are ready to implement the changes from 1^st April 2021, including not only altering the rates to be paid, but also identifying staff aged 23 and 24 who will be eligible for the higher rate. The changes need to be applied in your first pay period that begins on or after 1^st April.

Depending on how your payroll periods fall, this might be as late as the end of May, or as early as the first week of April. Employees may not understand this distinction between calendar dates and pay periods, so employers are able to add the increase to earlier pay periods if they want to, so that all calendar dates from 1^st April are covered, to avoid discontent. However this is entirely discretionary, and not a legal requirement.

With this change on the horizon, to add to all the payroll complications over the last 12 months with the Coronavirus Job Retention Scheme, you would be forgiven for cursing your responsibilities when it comes to payroll! Fortunately, here at ER Grove & Co we offer a payroll outsourcing service. We can take that responsibility off your hands, and ensure that you are compliant with all current and future payroll legislation.

Now is the best time to start the process of switching your payroll over to our outsourcing service, in advance of the new tax year, so contact one of our advisors today to find out more!