National Minimum Wage
On 21 November 2023, the government announced the increases to the national minimum wage (NMW) that will apply from 1 April 2024 following its acceptance of the complete recommendation from the Low Pay Commission in what will be the largest historical increase of NMW, worth over £1,800 a year for a full-time worker.
| Current NMW | Increased NMW | Increase | |
| National Living Wage | £10.42 *for +23 year old workers | £11.44 *for +21 year old workers | 9.8% increase |
| 18-20-year-old rate | £7.49 | £8.60 | 14.8% increase |
| 16-17-year-old rate | £5.28 | £6.40 | 21.2% increase |
| Apprentice rate | £5.28 | £6.40 | 21.2% increase |
| Accommodation Offset | £9.10 | £9.99 | 9.8% increase |
NMW rates for younger workers and apprentices will be significantly increased: 18 to 20 year olds will also get a £1.11 wage boost to £8.60 per hour. Apprentices and 16 to 17 year olds’ wages will be increased by over 20% to £6.40 per hour.
It is the Low Pay Commission’s view that the broader framework of the NMW still needs review so that a single rate is payable to all those over 18, but this has yet to be implemented.
National Living Wage
The national living wage (NLW) was introduced in 2016 and sets the minimum hourly pay. The announced increases will achieve the government’s 2019 target that the NLW be equal to two-thirds of the median hourly pay for those over 21 years old. For an NLW worker working 37.5 hours per week, the increases announced by the government will increase their annual pay by £1,994.36 and their monthly pay by £166.20.
Previously, eligibility for the NLW was extended only to those over 23 years old. However, from 1 April 2024, workers 21 and over will get a 12.4% increase, from £10.18 to £11.44, worth almost £2,300 a year for a full-time worker of 21 to 22 in age.
It is worth noting that since 2010, the NLW will have doubled from around £10,500 to nearly £21,000 a year for a full-time worker, affecting an estimated 2.7 million workers. The size of the increase is driven by the strength of pay growth across the economy which, according to the Low Pay Commission, is forecast to continue into next year.
In this same period, the proportion of workers on low hourly pay has more than halved from 21.3% to 8.9%. As stated by Chancellor of the Exchequer Jeremy Hunt, this review of NMW and NLW will have the effect of ending low pay in the UK.
Compliance and Enforcement
Given the rise in the rate of NMW and NLW, employers should review their rates of pay in the new year to be ready for the increase in wages from 1 April 2024 to ensure that workers are not underpaid once the new rates come into effect. This will be particularly relevant if workers have moved into a different age band.
Whilst the increase in NMW and NLW will come into effect on 1 April 2024, employers should note that the new higher rates of pay will become payable from the start of the first pay reference period after 1 April 2024.
The enforcement measures available for those employers who fail to comply with the new rates of pay include service of notices of underpayment, civil penalties, “naming and shaming”, recovery of underpayments through tribunals or civil courts and criminal prosecution.
It should be noted that inspections can be carried out by HMRC at any time, without an obligation to provide a reason, and can require employers to produce records to determine if the NMW is being paid to workers. In 2021-22, HMRC identified £16.3 million in wage arrears for over 120,000 workers resulting in the issue of nearly 700 penalties, totaling £13.2 million.