What business owners need to know about the Minimum National Wage increase


In his latest budget, the Chancellor announced an increase in the National Minimum Wage across all age groups. This “significant” rise is intended to help the lowest-paid workers regain financial stability following the coronavirus pandemic, and withstand the impact of higher inflation. However, it will also affect employers that are mandated to pay these increased wages.

The changes are set out below:

  • National Living Wage (applies to workers over the age of 23): increased 6.6% from £8.91 to £9.50
  • 21 – 22 year old rate: increased 9.8% from £8.36 to £9.18
  • 18 – 20 year old rate: increased 4.1% from £6.56 to £6.83
  • 16 – 17 year old rate: increased 4.1% from £4.62 to £4.81
  • Apprenticeship rate: increased 11.9% from £4.30 to £4.81
  • Accommodation offset: up 4.1% from £8.36 to £8.70

The two most important take-aways for business owners are these. First, that the rates above translate into a pay rise of more-than £1,000 a year for all minimum wage workers over the age of 23. Second, that the age at which a worker becomes eligible for National Minimum Wage will be lowered from 23 this year (prior to 2021, it was 25) to 21 by 2024. In practise, this could translate to a significant increase in the cost of labour for businesses which employ a large number of young minimum wage earners.

Bryan Sanderson, Chair of the Low Pay Commission, welcomed the announcement, saying:

“The rates we recommended will put money in the pockets of care-workers, food distributors and many other groups of the lowest-paid members of our society up and down the UK. Many of them have made a vital contribution during the last few difficult months.

“The pandemic has been an exceptionally difficult period for businesses and workers alike, but the labour market has recovered strongly and the economy is expected to continue to grow over the next year. This is attributable in no small part to comprehensive Government support.”

If upcoming increases to the National Minimum Wage are likely to affect your business, call JW Hinks on 0121 456 0190. Our friendly and experienced team can help you plan for changes to the labour market, ensuring your business meets new challenges confidently and successfully.

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JW Hinks LLP
19 Highfield Road, Edgbaston,
Birmingham B15 3BH

Phone: +44 (0) 121 456 0190
Fax: +44 (0) 121 456 0191
Email: info@jwhinks.co.uk