National Living Wage and Minimum Wage Increases April 2023
Following the recommendations of the independent Low Pay Commission (LPC), the government will increase the NLW from 1 April 2023
The new rates that will come into effect are:
| Rate at April 2022 | Rate from April 2023 | Increase | |
| National Living Wage
Workers aged 23 and over |
£9.50 | £10.42 | 9.7% |
| 21-22 Year Old Rate | £9.18 | £10.18 | 10.9% |
| 18-20 Year Old Rate | £6.83 | £7.49 | 9.7% |
| 16-17 Year Old Rate | £4.81 | £5.28 | 9.7% |
| Apprentice Rate | £4.81 | £5.28 | 9.7% |
| Accommodation Offset | £8.70 | £9.10 | 4.6% |
The new NLW represents an increase of over £1,600 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2 million low paid workers.
Real Living Wage (Voluntary) The UK Living Wage for Employers signed up to the scheme is £10.90 per hour (£11.95 per hour London Living Wage). Employers who have committed to paying the Living Wage have until 14 May 2023 to implement this.
Given the current economic climate, the reality may be that many employers are simply not able to increase employee pay at the same rate as increases to NLW/NMW. This is not just about those at the bottom of the payscale but those higher up – increases to the minimum rates where movements cannot be made at higher levels will produce considerable compression of wage bands and all the employee unhappiness which that can create. More employers are now paying more people at or around the NLW/NMW than ever before.
We recommend that employers review their policies around pay and working time for the impact it will have on their workforce. Considerations need to include, but is not limited to, elements around working time, salary sacrifice schemes, travel schemes and uniform deductions. Additionally, salaried workers pay should be calculated on the basis of 52.143 weeks per year according to HMRC rules.
Record Keeping
There is a requirement under the NMW Regulations to maintain sufficient records to evidence that the NMW has been paid for at least the last 3 years. It is a criminal offence not to do so.
Breaches
The Government publishes the names of employers found to have been in breach of the National Minimum Wage regulations. HMRC will go back up to 6 years in NMW pay investigations and employers found to be paying less than the legal wage face significant fines in addition to back pay to affected employees (subject to an overall cap of £20,000 per affected employee. This is a big incentive for businesses to audit their pay and working practices sooner rather than later.
How we can help
We offer comprehensive support to employers by carrying out a pay audit to ensure compliance with the regulations and conducting pay modeling for different pay award and pay structure scenarios.
You can also take advantage of our salary benchmarking tool to assess pay against your industry sector, company size and geographical area.
Call us on 01626 563101 or email hrsupport@commissioninghr.co.uk to discuss your pay practices.
