National living wage increasing to £11.44 per hour

It has just been announced that the National Living Wage (‘NLW’) is to increase from 1 April 2024. The policy change comes ahead of Chancellor Autumn Statement, which will outline the government’s latest tax and spending decisions.

The national living wage was introduced back in 2016. The NLW is the minimum people aged 21 and over must be paid for their work. For those under 21, the national minimum wage rates apply. Employer should take note that previously, the living wage only applied to those aged 23 and over.

From 1 April 2024 the rates of pay will be as follows:

• National living wage (21 and over) will increase to £11.44;
• 18 – 20 year old rate will increase to £8.60;
• 16 – 17 year old rate will increase to £6.40;
• the minimum hourly rate for Apprentices will be £6.40; and
• the accommodation offset limit will be £9.99. 

As a result of the increase, a full-time worker aged 23 would receive an increase of £1,800 per annum. A 21-year-old worker would see an increase of £2,300 per annum.

Employers should check that workers and employees are being paid the correct amounts and that their rate of pay is adjusted from 1 April 2024 if required. Employers may need to budget now for the increases which will take place, certainly in light of the NWL applying to 21 and 22-year-olds for the first time.

It is also advisable for employers to check those workers and employees who have recently had a birthday that will take them from one hourly rate to another. There is a requirement for employers to keep accurate pay records and make them available when requested. There are penalties should HMRC find that an employer has failed to pay the minimum wage. This includes a fine of up to £20,000 and legal action including criminal legal proceedings. A worker or employee who has failed to receive the minimum wage could make a complaint to the employment tribunal to recover the shortfall.

Due to high inflation the national minimum wage and national living wage have increased substantially compared to previous years. Employers will need to be alive to this substantial increase. With inflation due to fall by the end of the year, next year’s increases may well be more in line with previous increases.

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