On 1 April 2018, the National Minimum Wage (NMW) and National Living Wage (NLW) increased for all age groups.
Aimed at improving the prospects of young workers, the Chancellor Philip Hammond announced in the Autumn Budget that statutory wage rates would once again increase this year.
Those currently receiving the NLW, i.e. anyone over the age of 25, will have now seen their hourly rate increase from £7.50 to £7.83 an hour. This will mean that some full-time workers could be up to £600 a year better off.
For 21 to 24 year olds, the NMW has increased from £7.05 to £7.38, while 18 to 20 year olds have enjoyed a boost from £5.60 to £5.90.
Those below the age of 18 have seen their wages increase from £4.05 to £4.20, while apprentices have seen their NMW rate increase from £3.50 an hour to £3.70.
These new rates have boosted the earnings of between 260,000 and 360,000 young workers directly, but have also left businesses with a larger payroll bill.
Further pledges to increase the NMW and NLW are expected in future, with the Government indicating that it still hopes to meet its pledge of raising the NLW to nearly £9 by 2020.
The majority of these rate rises beat the current rate of inflation of around three per cent, meaning that businesses may struggle to cover some of the costs.
Failing to pay the correct statutory wage could result in severe penalties, including the possibility of a business being publicly named and shamed.
If you are unsure of your responsibilities in regards to minimum wage legislation or would like assistance with your payroll functions to ensure they remain compliant with the law, please contact us today.