National Living Wage increase 2024: What employers need to know | 3-minute read
Introduced in 2016, the National Living Wage is the government’s minimum wage for workers aged over 21.
When it was originally introduced, the aim was for the National Living Wage to reach 60% of the national median earnings by 2020. This target was achieved and so a new target was set to reach two thirds of median earnings by 2024.
In November 2023, the government announced as part of the Autumn Statement that the National Living Wage would increase from April 2024. Not only this, but the age from which employees will be eligible for the salary is falling from 23 to 21, meaning more workers will qualify for the higher wage.
So what do employers need to know ahead of the introduction of the higher Living Wage?
What are the new National Living Wage rates?
As of the first of April 2024, the National Living Wage has increased from £10.42 per hour to £11.44 per hour for workers aged 21 and over. This increase adds an additional £1,800 to the annual wage of around 3 million of the lowest paid workers in the UK.
This increase is the most significant in over 10 years, constituting more than 10% for those who receive it, far ahead of the current rate of inflation.
The Real Living Wage and London Living Wage have also risen by 10%, meaning approximately half a million workers will receive an immediate 10% pay rise – although it’s worth noting that these are both voluntary wages.
What impact will the National Living Wage increase have on businesses?
Although the increase in the National Living Wage has been welcomed by many during the on-going cost of living crisis, it has caused concern amongst some employers who will see a significant impact on their payroll.
Businesses will have to absorb the addition costs of the wage increase, with many unable or unwilling to pass them on to their customers. For smaller businesses, this may be particularly challenging and could, ultimately, result in job losses.
Which sectors will be impacted most by the National Living Wage increase?
Some sectors will be impacted more by the increase than others. According to the CIPD, the hospitality industry will be disproportionately affected, with 43% stating their pay costs were impacted last year, while other sectors will see far less of an impact. Within the professional services sector, for example, 64% of businesses said they had not been impacted by last year’s wage rises.
What are the benefits of paying the National Living Wage?
Despite the impact on payroll and wages, paying the Living Wage offers a number of benefits for businesses, helping them to attract and retain talent, and maintain moral in the workplace. After all, the cost of living has become an urgent issue in the UK, with no signs of costs falling any time soon.
How can employees ensure they are compliant with the new National Living Wage?
Businesses are legally required to implement the new rates of pay for any eligible employees, with the risk of severe penalties for failing to adhere. It’s important to consider issues such as pay differentials, zero hours contracts, and more. Businesses must update their payroll systems and review their records to ensure that every employee is paid the required amount, based on their age and hours.
Get in touch with Easy Paye today!
If you need support ensuring your payroll services are fully compliant with the latest changes to National Living Wage or you’re considering outsourcing your payroll don’t hesitate to touch with the team at Easy Paye. We take great pride in providing a range of clients with a comprehensive range of payroll services across the UK.
We’re a friendly, approachable team, and we’re always keen to chat with businesses in need of payroll services. So, get in touch today to find out more about the services we offer and how we could potentially help you to streamline your processes, saving time, money, and resources.
We provide our payroll services across Belfast, Birmingham, Bradford, Bristol, Cardiff, Coventry, Edinburgh, Glasgow, Leeds, Leicester, Liverpool, London, Manchester, Nottingham and Sheffield.
