09 January, 2023
The Department for Work and Pensions has published the annual rate increases that will take effect from 1st April 2023. As set out in the Autumn Statement, the government has followed the recommendations of the Low Pay Commission (LPC), intending to support the living standards of lower paid workers during the cost-of-living crisis. The annual increase to the National Minimum Wage (NMW) and National Living Wage (NLW) reflects an increase of up to 10.9%.
It is stated that the increases will amount to an additional £1,600 to the annual earnings of a full-time worker on the NLW and are expected to provide benefit to over two million low-paid workers. This additional income will likely be welcomed by employees across the UK, many of whom will be feeling the effects of the cost-of-living crisis.
The Chair of the Low Paid Commission, Bryan Sanderson, has said that "the rates announced include the largest increase to the National Living Wage since its introduction in 2016 and will provide a much-needed pay increase to millions of low-paid workers across the UK".
However, the Low Incomes Tax Reform Group (LITRG) have presented concerns following the proposed increases. The LITRG Technical Officer, Meredith McCammond, has stated "Increases in the minimum wage mean that extra costs are borne by the employer - not just prima facie rate rise - but also increases in employer's National Insurance Contributions, holiday pay and pensions contributions. Some employers will have already been contending with difficult trading conditions and increasing costs and may struggle to absorb further large increases at this time".
If you are an employer, you should ensure to be prepared for the rate increases before 1 April 2023. For both new starters and current employees, check that you are paying the correct rate and if needed, update their contracts of employment in line with the changes to ensure compliance. A helpful tool for you to utilise is the government's NMW/ NLW calculator to ensure that you are paying your employees correctly.
For more information contact Harry Hazelwood in our Employment & HR department via email or phone on 01772 220207. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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