The Chancellor has confirmed, in a speech at the Conservative Party Conference, that the National Living Wage rate from April 2024 will be at least £11 per hour.
The minimum wage a worker should receive depends upon their age and whether they are an apprentice. The National Minimum Wage is the minimum pay per hour for those of at least school leaving age. The National Living Wage was first introduced in April 2016 at 50p above the standard adult rate of the National Minimum Wage. It is now a separate age-related hourly rate. Since April 2021 it applies to those aged 23 and over. The current rate, applicable from April 2023, is £10.42.
It is reviewed each year by the Low Pay Commission (LPC), an independent body, which provides recommendations to the government. Whilst their recommendations for the rates that will take effect from April 2024 are not due to be announced until November, the Chancellor has committed to accept them. Based on the LPC’s latest forecast, it would see the National Living Wage increase to over £11 an hour from April 2024.
This will mean that the annual earnings of a full-time worker on the National Living Wage will increase by over £1,000 next year. Due to the rises in the National Living Wage, it also means that a full-time worker on the National Living Wage will be over £9,000 better off than they would have been in 2010.
The age threshold to receive the National Living Wage is also due to be lowered to 21 years old from April 2024.
It is important that employers watch out for announcements on the National Living Wage and update the rates accordingly in their business at the appropriate time. Failure to do so could result in a notice of underpayment being issued by a compliance officer. This will set out the arrears the employer must repay and require the employer to pay a financial penalty to the Secretary of State within 28 days of service.
The government also publishes a list of named non-compliant employers which could cause the business reputational damage. It details the employer, the number of workers underpaid, and the amount of arrears. For a small minority of employers who persistently fail to comply and refuse to co-operate with compliance officers, a criminal investigation may take place.
We will have to wait for confirmation of what the exact rates for the National Living Wage and the National Minimum Wage will be from April 2024. But employers need to ensure that they always pay at least these minimums in the applicable pay reference period.
There are some employers who voluntarily pay more by opting in to pay the Real Living Wage. This is a rate based on the cost of living that employers can voluntarily pay their staff. The rates for 2023/2024 have just been announced and they represent a 10% increase for those who receive it. It will increase from £10.90 to £12 an hour, and from £11.95 to £13.15 an hour in London. Employers who voluntarily pay their employees the Real Living Wage will have until 1st May 2024 to implement the new rates.