Today, the 1st April 2022, marks the increase to both the National Minim Wage (NMW) and the National Living Wage (NLW).
The NLW for those aged 23 or over will increase from £8.91 to £9.50 an hour.
The apprentice rate is increasing from £4.30 to £4.81.
This will mark the largest ever uplift to the National Living Wage for workers aged 23 and over, with a £1,000 a year pay rise for full time workers.
Subsequently, around 2.5 million UK workers will receive a pay rise, according to the UK Government site.
Business Secretary, Kwasi Kwarteng says: “While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.”
Is the minimum wage increase enough?
UK Head of Employment Law at DWF, Joanne Frew, comments on what it means to those on low pay, and what employers now need to do. She says:
“This timely annual increase will be welcomed by many as the UK faces the challenges of a cost of living crisis.”
“Recognising that young workers have been severely impacted by the pandemic, the hike in minimum wage represents a clear step in the right direction. However, many would argue that the increases do not go far enough, to counter soaring inflation and the increased cost of living,” Frew adds.
Director at Sodexo Engage, Jamie Mackenzie, agrees. He says: “While wage increases are certainly welcome, especially against the current backdrop of rising prices, this may feel like giving with one hand and taking back with the other. According to the Trades Union Congress (TUC), energy bills are due to rise at least 14 times faster than wages this year, more than cancelling out the boost of the minimum wage hike, and in turn, leaving households financially vulnerable.”
“While wage increases are certainly welcome, especially against the current backdrop of rising prices, this may feel like giving with one hand and taking back with the other. According to the TUC, energy bills are due to rise at least 14 times faster than wages this year, more than cancelling out the boost of the minimum wage hike, and in turn, leaving households financially vulnerable,” adds Jamie.
Employers to be under greater scrutiny
How employers react to the NMW increase is very important.
“As the lowest paid workers are struggling to manage, employers will be under increased scrutiny with regard to NMW compliance. Due to the highly complex nature of NMW calculations, many high profile employers have previously inadvertently fallen foul of the legislation, resulting in substantial penalties and reputational damage. Where workers are paid the NMW, or near to the NMW, employers should consider undertaking a NMW audit in order to minimise risk,” says Frew.