National Minimum Wage

Changes to the National Minimum Wage

In 2021, there have been several legislative changes that both employers and employees need to be aware of. But one of the legislative changes that is happening is the increase in National Minimum Wage and National Living Wage (yay more money!)

What Are They?

The National Minimum Wage (NMW) took effect on 1 April 1999.

On 1 April 2016, an amendment to the act attempted an obligatory “National Living Wage” for workers over 25, which was implemented at a significantly higher minimum wage rate of £7.20 which has increased along with the National Minimum Wage. When this statutory right was first met with objection as people believed that it would just force low paid workers out of their job. However, after over 20 years it has proved this may not be the case and ensured people got paid a reasonable wage.

The very lowest paid now have hourly pay around £2.70 more in real terms than would have been the case in the absence of the NMW. To a full-time worker that difference is an additional £5,000 per year. Around 30% of jobs have benefited from the NMW/NLW and weekly pay has increased faster for workers with the lowest hourly wages.

What’s The Difference?

The National Living Wage and the National Minimum Wage have been increased on 1st April 2021 National Living Wage will also include all those aged over 23. The new wages are as followed:

  • 23+ = £8.91 an hour,

  • 21-22 = £8.36 an hour,

  • 18-20 = £6.56 an hour,

  • 16-17 = £4.62 an hour,

  • Apprentice = £4.30 an hour,

 

The National Living Wage and National Minimum Wage are statutory and differ to the Real Living Wage. This means that is a legal requirement to receive this pay and employers can be taken to an employment tribunal if employees are not receiving this pay.

The Real Living Wage is a UK wage rate that is voluntarily paid by 7,000 UK businesses and is based on living costs. In November last year, the Living Wage Foundation announced the rates for 2020/21, stating employers committed to the Real Living Wage should implement the rise as soon as possible and within six months. It added that all employees should receive the new rate by May 2021.

Currently, the UK Real Living Wage is £9.50 per hour, while it is £10.85 in London, with both covering the age group of anyone who is 18 or older.

Other statutory rights are family friendly rights such as maternity leave and pay and paternity leave and pay. This are also subject to change and have also increased… From the 4th of April 2021 – Family Friendly Statutory pay increases by £0.77.

These include:

  • Statutory Maternity Pay – first six weeks at 90% of average weekly earnings. The following weeks at £151.97 or 90% (whichever lower).
  • Statutory Adoption Pay – first six weeks at 90% of average weekly earnings. The following weeks at £151.97 or 90% (whichever lower).
  • Statutory Paternity Pay – £151.97 for two weeks.
  • Statutory Shared Parental Leave Pay – £151.97.

And on the 5th of April 2021 Sick pay increases by £0.50 to £96.35.

There are also other key legislative changes that have come into effect this year such as:

  • 1st January – New immigration laws
  • 12th February – The Public Sector exit payment cap has been revoked.
  • 30th March – Gender pay gap reports including any bonuses from public sector companies with 250 employees or more.
  • 4th April – Gender pay gap reports including any bonuses from private sector companies in England, Wales, and Scotland with at least 250 employees must be published by this date using data collected form 5th April every year.
  • 6th April – The IR35 rules are now down to the employer to decide whether the IR35 rules apply.

Please see our Employment Law Bulletins for more information.

Remember key changes such as National Living Wage now applies to all those aged 23 and over not 25 and over!

And as always Wurkplace are always here to help you when you need!

 

Wurkplace is here to help! We provide bespoke HR and Health & Safety solutions to businesses all around the UK.

Contact us by calling 0330 400 5490 or emailing info@wurkplace.co.uk for more information.

 

 

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