From April 1st, 2019, the national living wave increased by 4.9% from £7.83 to £8.21. This is the statutory minimum wage for all employees aged 25 and over and means that businesses need to ensure that any staff on the existing figure have their pay amount increased. According to the Low Pay Commission (LPC), there are around 2.4 million workers around the UK who will be impacted by the change.
Changing figures
The LPC recommended the increase as part of an overall aim to increase the national living wage to 60% of median earnings by 2020. Chancellor Philip Hammond announced the change in October’s budget which means that a full time worker will see around £690 a year pay rise under the new minimum wage.
It also means that the full time minimum wage worker will have seen an increase in annual salary of more than £2700 since the national living wage was introduced in April 2016. The national minimum wage was introduced back in 1999. All levels of the minimum wage are also increasing from 1st April:
- 21-24 year olds – £7.38 to £7.70 (4.3%)
- 18-20 year olds – £5.90 to £6.15 (4.2%)
- 16-17 year olds – £4.20 to £4.35 (3.6%)
- Apprentices – £3.70 to £3.90 (5.4%)
There will also be an increase in accommodation offset which will rise from £7 to £7.55 at the same time as the other increases take place.
Looking ahead
Chair of the LPC, Bryan Sanderson said that the change means that the rise for the lowest paid workers is above both average earnings rises and also inflation and also shows that the labour market continues to perform well. Even the economy, while subdued with other issues, has met their definition of ‘sustained growth’ which means they will continue to campaign for rises.
Their estimates say that the national living wage will reach £8.62 by April 2020 as well as recommending increases for all the younger worker groups and apprentices. This year’s increase was recommended at a lower rate than previous years due to the other factors that are at play in the economy.
How businesses deal with the rise
By law, businesses need to ensure that the national minimum wage figure is met or there could be legal repercussions. Failure to pay staff at least the national minimum wage has led to civil action and even criminal prosecution as well as the loss of reputation when a company is ‘named and shamed’ in the media.
There are also financial penalties in place for companies who don’t make the change. In March 2014, this increase to from 50% to 100% of the underpayments and a maximum penalty of £5,000 to £20,000.
This means that it is important to assess wages for all staff to ensure that they are receiving the right amount. By working with your payroll specialist, you can ensure that your business pays staff the right amount, staff are happy and there’s no risk of a costly financial and legal issue due to underpayment.
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