National Living Wage / National Minimum Wage Changes

Around this time of year, it is a good idea to look at your rates of pay in the light of the changes to the National Living Wage (and National Minimum Wage) that will be coming into effect from 1 April 2025. There are are a few examples below which will help you to decide what you might need to do:

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If you have anyone being paid less than £12.21ph, then review whether you need to increase their pay with effect from 1 April 2025.

If they're aged 18-20, then the new minimum rate for them is £10ph - but make a note if they'll be turning 21 during the next 12 months, so that you know when to increase their pay. From statutory school leaving age to 18, the minimum rate will be £7.55. This is also the minimum rate for apprentices in their first year.

If you pay people on a salaried basis, then be aware that there's a maximum number of hours someone can work within a week before they drop below the minimum. If someone works additional hours without pay then you need to keep an eye on it. For example: for £22,500pa, the maximum working hours in a week is 35. For £30,000pa, the maximum weekly working hours is 47. This also applies for each pay period, so if they work extra hours in any week/month then you have to make sure that when you divide their pay by the actual number of hours worked then it comes to at least £12.21ph during that pay period.

Of course, you may also need to increase the pay of others within the team, even if they already get more than the minimums, so that you maintain an appropriate differential between pay for different roles within your team.

Also bear in mind that average earnings growth at the end of 2024 (for the private sector) was 6%. The increase in National Living Wage is slightly higher than this, at 6.7%. CIPH inflation was 3.5%. So pay definitely appears to be rising faster than inflation at the moment. Some of us will also need to factor in the increase in the rate of Employer's National Insurance from April. It's a challenging time for small businesses when it comes to employment costs.

If you'd like any assistance with planning the right rates of pay for your team from 1 April then please do get in touch with us, or if you just need us to help with the written confirmations of new rates of pay, then we can help with that too. Please contact hello@hrbytara.com.