Get ready for the National Living Wage rise

What is the National Living Wage?

The National Living Wage is the hourly rate most workers aged 23 or over are entitled to by law. Last year, Chancellor Jeremy Hunt announced that this age limit would be lowered to 21 from April 2024. The wage would also increase from £10.42 to £11.44 per hour from this date.

How does it differ from the Minimum Wage?

The National Minimum Wage is the hourly rate most workers under the age of 23 are legally entitled to. It can vary based on age or employment status (eg for apprentices). Workers over 21 who aren’t first-year apprentices will be entitled to the Living Wage from April.

How could this affect businesses?

Kate Nicholls, CEO of UKHospitality, believes this change could have ‘significant knock-on impacts’ on venues and their cash flow. Making cuts in other operational costs between March and September will help you adjust to the wage increase. 

What must employers do?

A rise in wages means increasing payroll costs. Any staff aged 21 and currently on minimum wage will now be paid more per hour. This means reallocating budget and updating payslips and tax codes before April. Employers that don’t could face fines of up to £20,000 per worker.

How to prepare your business

Plan: Calculate the financial impact ahead of time to make cost savings and alter prices.

Update payroll: Adjust the wages of any eligible employees before 1 April. Remember, this doesn’t include tips, expenses or unsociable hours pay.

Get advice: Contact an accountant or the National Business Support Helpline for support.