13 December, 2023
In April 2024 there will be significant increases to the National Minimum Wage and the National Living Wage. This is the first time that the minimum wage has increased by more than £1 and as a result will have a significant impact on businesses, especially those that have a large amount of staff who are paid the minimum wage or sums close to this. This will also impact on those organisations that have graded structures where these changes may give rise to considerations about if these structures are viable going forward.
From 1st April 2024, the National Living Wage age threshold will be lowered to 21 (previously this applied to all workers aged 23 and over) and will rise from £10.42 to £11.44 per hour. There will be a £1.11 increase in the National Minimum Wage for 18-20 year olds to £8.60 per hour, and a £1.12 increase in the National Minimum Wage rate for both 16-17 year olds and the apprentice rate, to £6.40 per hour.
Whilst it is essential for any business to ensure that they comply with the National Minimum Wage and National Living Wage, the increase will add an extra administrative burden for businesses to ensure that workers are not underpaid once the increases take effect. It is really important to keep track of the ages of individuals to ensure that their pay continues to comply with the NLW/NMW when they move into a different age band or complete the first year of their apprenticeship. Also, businesses must be mindful if there are any deductions being made from an individuals pay which will reduce pay for the purposes of the minimum wage calculation. Undertaking a payroll audit prior to the 1st April would be sensible to ensure compliance and avoid falling foul of any HMRC investigation.
The use of apprentices within a business have always been something the Government have encouraged and this was reiterated in the recent Autumn statement, where the Chancellor announced a £50 million pilot to "stimulate" apprentice training in engineering and other growth sectors. Whilst there haven't been any details of the policy as yet, this is something for a business to consider as the Government have suggested that this funding will meet the needs of learners, employers and training providers and may therefore result in a return to the monetary incentives that businesses saw post COVID. For those businesses that don't currently offer apprenticeships, this is certainly something to consider in the new year.
The Government have also announced plans to reform workplace pensions in 2024 in which there would be a "one pot for life" model. This was also announced as part of the Autumn statement where the Chancellor said that he would consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot. There have been mixed reactions to the announcement, as this may lead to an additional administrative burden for employers, however, we shall await details of this proposal and the outcome of the consultation.
There will also be a focus in 2024 on helping people get back to work. It seems that the "Back to Work" plan will look to support individuals with long term health conditions, disabilities or the long term unemployed to look for and stay in work. As part of this, the Government announced plans to consult on reforms to fit notes and whilst there are no specific details on what these reforms will look like, it has been indicated that the intention is to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
There will also be time-limited mandatory work placements introduced for those who are still unemployed after receiving 18 months of specialised employment support. In addition, an expansion of the Universal Support scheme was announced, which matches long term sick and disabled individuals with suitable vacancies and provides up to £4000 of support per participant which can be used to fund training or employer adjustments.
The Government also announced stricter benefit sanctions will be enforced by the Department for Work and Pensions for people who are able to work but refuse to engage with their Jobcentre or take on work offered to them.
2024 will also undoubtedly see discussions about pay transparency, primarily to look at tackling pay inequality. The Government have said that they recognise how pay transparency would be beneficial in particular with regard to improvements in pay equality. This may include looking at requiring participating employers to include information about salaries in job advertisements, and also to refrain from asking about salary history during the recruitment process. Whilst this is not a legal requirement as yet, there does seem to be growing momentum towards making these provisions law.
Therefore, whilst not a legal requirement, it would seem sensible for employers to consider adding salaries to job adverts. This may very well boost candidate attraction in an already competitive job market and ensure that candidates who apply are doing so with a clear understanding of what the remuneration is for that role. Recruitment selection based on future potential rather than current salary would also be a positive step for employers and candidates, however, we shall wait and see if this forms part of any legislation going forward.
The way a business structures itself is changing, with there being a conscious move away from rigid structures based on traditional jobs to a skills based workforce approach with collaboration at the heart of the organisation to incorporate and support hybrid working and the expectation of flexible working. It is important that businesses take this opportunity to review their organisation chart and consider if there can be changes in any traditional approach taken, to make structures based more on tasks rather than with set reporting lines.
For more information contact Gabriela Hammond in our Employment & HR department via email or phone on 01772 220149. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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