National living wage and national minimum wage increases
1 April saw the biggest increase in the national living wage since the concept was introduced. An increase of 4.9% will see a wage rise from £7.83 to £8.21 per hour if they are aged 25 and over. It is estimated that this increase will potentially impact 2.4 million employees in the UK.
Although this was not unexpected, it will no doubt be unwelcome for many employers who will, during these uncertain times, not only have to find the extra to pay the increased wage, but will also need to fund the increased pension contributions required by law.
The cost of redundancies for employers will also increase as the maximum statutory redundancy payment rises to £15,750, coming in to effect on 6 April.
As well as the increase to the national living wage, the national minimum wage has increased for all age groups:
- For 21 to 24 year olds, it will rise to £7.70 per hour from £7.38
- For 18 to 20 year olds, it will rise to £6.15 per hour from £5.90
- For 16 to 17 year olds, it will rise to £4.35 per hour from £4.20
There will also be a 5.4% increase for apprentices, with their wages rising to £3.90 per hour.
Along with the increase in the national living and minimum wages, the personal allowance will increase from £11,850 to £12,500 with effect from 6 April meaning that the lowest paid employees will get a real wage boost.
The impact on employment and economic growth is yet to be seen, especially given the turbulence around Brexit. For employees, though, a rise in the minimum wage can only be a good thing given the rise in the cost of living. For smaller employers it could be a different story, only time will tell.
For any information or advice on employment law please contact our Employment team here at GL.