Employers - Rise in National Minimum Wage April 2020

30 January 2020

The current national minimum wage (NMW) rates will be increased in April 2020 giving 3 million UK workers a significant cash boost.  For a full-time employee this could result in an increase of up to £930 a year.

National Living Wage (for over 25 year olds) will increase 6.2% from £8.21 to £8.72.

The National Minimum Wage will rise across all age groups, including:

• A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
• A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
• A 4.6% increase from £4.35 to £4.55 for Under 18s
• A 6.4% increase from £3.90 to £4.15 for Apprentices

In the lead up to April, employers should work with their payroll department to ensure that employees’ date of birth details are correct as NMW rates have clearly defined age boundaries.  Also, they should check the new hourly rates are reflected in staff salaries, starting from the relevant pay reference period.  Unintentional errors could result in claims for unlawful deduction of wages.

We would suggest employers notify their staff of the pay rise ahead of time with written confirmation. This transparency is likely to be well received and could help build positive employee relations. It also offers an opportunity to explain that any overtime worked during a pay reference period prior to the introduction of the new rates, that is payable after these have been introduced, will still be paid at the previous rate.

Additionally, if an employer already chooses to pay staff over NMW as part of a competitive benefits package, they may consider increasing salaries further, in line with these changes. This may help in retaining a competitive advantage over minimum wage employers when it comes to recruitment and retention efforts.

Whilst there may be several months until these new rates are introduced, employers should avoid leaving preparations until the last minute. With employees becoming increasingly aware of their rights, especially when it comes to their pay, any failure to implement these new rates on time is sure to be noticed and could be particularly costly in terms of reputation.