The Government have announced a National Living Wage (NLW) increase of 6.6% due to take effect in April 2022. This will take the NLW to £9.50 for workers over 23 years of age. Alongside this, National Minimum Wage (NMW) is due to increase quite considerably for young workers as well. For 16-17 year olds, and 18-20 year olds, the rate will increase by 4.1%, making the rate £4.81 and £6.83 respectively. For workers between 21-22, the rate will increase to by 9.8% to £9.18.
The rise signifies Boris Johnsons “levelling up agenda” which is geared to produce a high wage, high skill and high productivity economy. We should also expect to see similar rises in family friendly leave such as maternity, paternity, adoption and shared parental leave. We may also see a rise in statutory sick pay (SSP) however this would likely see a rise in the lower earnings limit for which employees are eligible for SSP.
What does this mean for employers?
This increase has been welcomed by workers, however less so for small and medium sized business owners who need to plan and consider the impact the increase will have on their profit margins. Essentially, the increase means a hefty increase of £1,074 per full time worker before tax for workers over the age of 23. Businesses will need to consider how best to plan for the increase and put prepare for a potential reduction in profits, whether there will be an increase in product or service price for customers or whether potentially job losses will be necessary.
This can be a difficult and stressful time for business owners. If you need help or support in planning or prepping for the increase of NMW and NLW, please give us a call today and speak to our CIPD qualified consultants.
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