Chancellor announces rise in the National Living Wage

In today’s budget, Chancellor Rishi Sunak announced a rise in the National Living Wage.

This was following recommendations made by the Low Pay Commission.

Chris Dobbs outlines the new rates below…

UPDATE: The potential 2024 Minimum & Living Wages have been announced. Find out more here.

What’s the difference between minimum wage and living wage?

The National Minimum Wage is the minimum hourly pay that almost all workers under the age of 23 are entitled to.

Whereas the National Living Wage is the minimum hourly pay that almost all workers over the age of 23 are entitled to.

The National Living Wage is higher than the Minimum Wage.

What is the current national living wage?

Below are the current rates for the National Living Wage (NLW) and National Minimum Wage (for those of at least school leaving age) per hour. The rates normally change on 1^st April 2022.

What is the living wage rising to?

The National Living Wage will rise from £8.91 per hour to £9.50 from 1^st April 2022.

Assuming a 40-hour working week, the new minimum wage amounts to a salary of £1,646 per month or £19,760 per year.

Other Statutory Rate Changes in April 2022

While none were specifically referred to in the budget, statutory rate changes usually follow any announced change to the minimum wage.

These are often calculated annually and later in the year, so we will update on any changes to sick pay, maternity and paternity pay or the ‘weekly pay’ calculation as and when these may be announced.

To keep updated with any statutory rate changes, please subscribe to our employment email list here.

What does this mean for employers?

Chris Dobbs says: "Budget and Autumn Statement are both good times for employers to review their financial positions.

For most employers, wage bills are one of (if not the) largest regular expense so very often these are well managed.

Employers with staff under the age of 23 should be mindful of regularly checking that staff are in the correct pay bracket and when a change is announced anyone paying staff at or around minimum wage want to review to ensure that the correct rate is being paid.

The cost of failing to do so can be significant. Even a relatively small number of staff underpaid for just a few weeks can result in a costly collective sum."

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