As you will have heard, the National Living Wage which was reported earlier in the week has today been confirmed in the Budget. It will increase for those over the age of 23 to £9.50 on 1st April 2021. There are also increases to the National Minimum Wage for under 23’s.
What are the increases for the National Living/Minimum Wage?
The National Living Wage is a % of average earnings, is set by the Government and is the legal minimum that employers in the UK must pay. The increases will be as follows:
| Age | Current rate of Pay from 1st April 2021 | NEW Rates from 1st April 2022 |
| 23+ | £8.91 | £9.50 |
| 21-22 | £8.36 | £9.18 |
| 18-20 | £6.56 | £6.83 |
| Under 18 | £4.62 | £4.81 |
| Apprentice* | £4.30 | £4.81 |
*Apprentice rate is payable at either age 19 or below or aged 19 and in the first year of their apprentice.
The National Minimum Wage for apprentices will be the same as those aged 16-17 when the new rates are introduced.
Why do we need to pay the National Living/Minimum Wage rates?
As an employer these minimum amounts are a legal requirement, and you could be fined if you fail to implement them by HMRC and you could also receive an employment tribunal claim. You must keep adequate records of all payments so that you can demonstrate compliance with the national minimum wage rules. Of course, don’t forget to write to your staff confirming their pay increases.
Uniforms and the National Living/Minimum Wage rates – what do you need to know?
If you require your workers to wear specific uniforms or buy specific items for uniform and you make deductions for these items from their pay, then this will reduce their national living/minimum wage pay and you could be in breach of the national living/minimum wage rates as it will mean they are not being paid the legal minimum rates. This is also the case if you have a dress code such as black trousers and a black top which they can buy in any shop because you are requiring them to have this as uniform.
For example:
A shop requires a worker to wear a t-shirt with a logo which the employee purchases from the employer. If a deduction from pay is made or the employer requires a payment for the t-shirt this will reduce the worker’s national living/minimum wage pay. You need to ensure this would not be a breach of the national living/minimum wage and take them below the set amounts. Consider providing the uniform.
OR
A shop requires a worker to wear an all black uniform which they can purchase anywhere and therefore no deductions are made. However, as this is a specific requirement for the role it will still reduce National Living/Minimum wage pay.
If a worker chooses to buy items that are not required or are in addition to the minimum requirements, then their national living/minimum wage pay is not reduced.
What considerations could you make in terms of uniform?
- Provide uniform to employees free of charge
- Avoid any specific dress requirements
- Increase wages to meet the cost of uniform in the first pay period to cover the cost of uniform
The real living wage
You may have heard of the real living wage which is different to the rates above set by the Government, but what it is?
It applies to all workers aged 18 and above
- It is based on the cost of living
- It is independently calculated and is not set by the Government
- It is updated annually on 15th November to reflect changing living costs
- It is a voluntary rate paid by over 8,500 employers
- It has a separate London rate because the cost of living in London is higher
What is the real living wage currently?
The Current UK rate is £9.50 per hour and the current London rate is £10.85 per hour.
The new rates will be announced on 15th November as part of #LivingWageWeek.
You can find out more and become a Living Wage Employer here
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