National minimum wage and other employment rate increases
In this update we provide a summary as to how and why rates are changing and what employers need to do.
National Minimum Wage
What is the National Minimum Wage?
As a matter of law, all workers and employees in the UK who are at/above school leaving age must be paid at least the statutory minimum wage, being the National Minimum Wage (“NMW”).
NMW is split into categories based on age and apprenticeship status. Workers are paid at the applicable rate and if an individual changes band then their NMW entitlement changes accordingly. The highest rate of NMW, paid to workers aged 23 and over, is called National Living Wage.
The NMW rates will change on 1 April as follows:
|NMW: Hourly Rate per Age Band
|23 and over
|21 – 22
|18 – 20
|From 1 April 2023
Why does National Minimum Wage keep increasing?
Ahead of each tax year, and after monitoring and evaluating the UK’s economic conditions, the low pay commission provides the government with a report recommending any changes to the NMW. The government then determines what changes, if any, will be made and generally any increases are in line with the recommendations made by the low pay commission.
We’re seeing a similar percentage increase to other statutory pay amounts:
Statutory Sick Pay
The rate of Statutory Sick Pay is reviewed annually and, whilst it’s not on the same date every year (although it’s always early April), this year’s change occurs on 10 April:
|SSP: Weekly Rate
|From 10 April 2023
Statutory Pay for Family Related Leave
(after first six weeks’ pay at 90% of normal weekly earnings)
|Shared Parental Pay
|Parental Bereavement Pay
|ALL: £156.66 or 90% of normal weekly earnings, if lower
|From 10 April 2023
|ALL: £172.48 or 90% of normal weekly earnings, if lower
So What Do Employers Need to Do?
- Pay attention to the rate changes: don’t let them come as a surprise
- Pre-empt the increases. Make the necessary changes to your payroll, pension and other processes, so that the new rates will be implemented from each relevant date.
- If workers receive NMW then have reviews/measures in place to mitigate any situations (such as a pay deduction) which would otherwise place them below NMW at any stage.
- Look out for our handy updated Employment & HR Guide – coming soon. It will provide more detail on pay rates and timeframes plus What’s To Come in 2023.
For further assistance
For advice or assistance with any of the above matters please get in touch with our employment team.