Every year the government announces any changes to the National Minimum Wage and the National Living Wage.
However, this year the government has announced big changes to National Living Wage – that have never been seen before.
The big move sees, not just an increase in pay, but a change in those who are eligible for the National Living Wage.
The National Living Wage Changes
The National Minimum Wage and the National Living Wage are separated by age.
This means that once you reached a certain age, you receive a higher wage than when you first started working as a teenager.
In 2020 the National Living wage was reserved for workers aged 25 and over. The current rate is £8.72 per hour.
However, from 1st April 2021 the rate will go up, and the age threshold of those eligible will come down.
This means that workers aged 23 and over will be eligible for the National Living Wage, which will also increase to £8.91 per hour on 1st April 2020.
How Should Businesses Account For This Change?
Change Your Staff To NLW
If you run your own business, you will have to make sure that anyone aged 23 and 24 are on your payroll to receive the National Living Wage, rather than the National Minimum Wage.
It’s also a good time to take stock of staff birthdays. Ensure that your whole team are all receiving the correct national wage rates for their age group.
Consider Furlough Costs
Some of your staff may still be on furlough, and this change will need to be reflected in their pay. It also may help you to decide whether those staff should remain on the Job Retention Scheme (from now until it ends in September 2021).
Communicate With Your Staff
It’s important to always communicate wage changes with your staff.
Sometimes this is as easy as relaying good news – your wage is increasing!
Other times it may be having a conversation to reduce their hours.
This decision may be necessary so that your business can continue to operate during times of economic uncertainty. If you have a group of staff members aged 23 and 24, this will see a big jump in your payroll – which might prove too much to keep your business sustainable.
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