Insight
The UK Government announced yesterday (21 November 2023) that it has accepted the Low Pay Commission’s recommendations on minimum wage rates. It is expected that these will apply from 1 April 2024.
In addition to increasing the rates, the Government has also agreed to lower the age threshold for the National Living Wage from 23 to 21. The Low Pay Commission reports that these changes achieve two targets and recommendations first raised in 2019: (i) for the National Living Wage to be extended to 21 and 22-year-olds; and (ii) for the National Living Wage to be equal to two-thirds of the median hourly pay for those aged 21 and over.
The new rates are:
- National Living Wage (21+): £11.44 (up from £10.42)
- 18-20: £8.60 (up from £7.49)
- 16-17: £6.40 (from £5.28)
- Apprentice rate: £6.40 (from £5.28)
- Accommodation Offset: £9.99 (up from £9.10)
The Low Pay Commission reports that this is the largest-ever increase in cash terms and the first time it has increased by more than £1.
The Real Living Wage
On 24 October 2023, the Living Wage Foundation announced its new rates, which are £13.15 per hour in London and £12 per hour in the rest of the UK.
The ‘Real Living Wage’ is separate from the Government’s rates. It is independently calculated based on the current cost of living and takes into account the essentials (such as groceries and rent) as well as certain luxuries (like buying birthday presents). It is currently paid voluntarily by more than 14,000 UK businesses.
Real Living Wage-accredited employers have six months (until 1 May 2024) to implement these rates and retain their accreditation.
Employers should make a note of these increased rates and ensure that they make preparations with payroll in plenty of time before 1 April 2024. If you require any information or assistance in respect of the National Minimum Wage rates please contact our specialist Employment Team.