Changes from April 2024: National Minimum Wage increase

The National Minimum Wage (NMW) is the minimum pay per hour almost all workers are entitled to. The NMW is shown as an hourly rate, however, it applies to all eligible workers even if they are not paid hourly.

Following recommendations by the Low Pay Commission in November 2023, the NMW will be increased from 1 April 2024.

The increase to NMW is the largest rise in a decade and the first time the rate has increased by more than £1. The NMW increase was driven by many factors including the need to improve standards of living.

From 1 April 2024, the following NMW rates will apply:

The National Living Wage (NLW) was originally introduced in 2016 as a premium on top of the NMW for workers aged over 25.  It is now effectively just the top age-related rate of NMW.  We therefore refer throughout to the NMW, and so not to confuse with the NLW recommended by the Living Wage Foundation, which is voluntary.

Who is entitled to the NMW?

Employers must pay the NMW to anyone who is an employee or a worker, regardless of their working patterns or roles and regardless of the business size. This includes part-time and casual or agency workers, agricultural workers, apprentices, employees on probation, foreign workers, home workers, offshore workers and seafarers, workers paid by commission, piece workers and zero-hours workers.

Amongst those not entitled to NMW are self-employed individuals, volunteers and workers younger than school leaving age.

When should I start paying the higher rate NMW?

The new NMW rates are applicable from the next pay period following 1 April 2024. The ‘pay reference period’ is the period of time the pay covers. The pay period will be 1 week, if paid weekly, or 1 month, if paid monthly. The period cannot be longer than a month.

Example: If there is a NMW increase on 1 April and a worker gets paid on the 12^th of the month, the old rate will apply until the next pay reference period starts on 13^th April. At a minimum, the worker should get paid the old rate for 1 April to 12^th April and the new rate for 13^th April to 12^th May.

Employer considerations

Many employers will benefit from being proactive in assessing their compliance with the new NMW rates before the April payroll.

Currently, those aged 21 to 22 qualify for a lower rate.  But from April 2024, individuals aged 21 and 22 are entitled to the same rate as older workers.

Employers should ensure employee information is up-to-date and accurate for payroll purposes, for example, updating details relating to an individual’s age and status where an age increase straddles the pay period and two separate hourly rates are payable in one pay period.

Employers are reminded of their legal obligation to pay their employees the NMW. Employers who do not pay employees at the appropriate NMW rates are not only at risk from potential fines and claims by workers, but also “naming and shaming” by HMRC, recovery of underpayments through tribunals or courts and ultimately, criminal prosecution.

The NMW increase may also have a knock-on effect on the hourly rates and salaries of longstanding staff. To safeguard staff retention employers may wish to increase the pay of workers in the payment band above those whose wages are being increased, in line with NMW, to ensure that an appropriate variance in wages is maintained.

If you have any questions about the NMW increase, or any other employment law issue, please do contact a member of the Employment team.