Joe Brewer Consulting Partner

The new National Minimum & Living Wage increases have been announced and come into effect from April 2022. In this article, Joe Brewer sets out the changes you should be ready for. 

Any increases are recommended to the Government by the Low Pay Commission (LPC). The LPC is made up of 9 commissioners from different and independent backgrounds who advise the Government annually on wage rates and increases. 

What are the changes?

The LPC’s recommendations that have been adopted by the Government for this year from April 2022 are:-

  • National Living Wage to be increased to £9.50.
  • 21–22-year-olds to be moved onto the National Living Wage by 2024.
  • Government advised to reduce the gap from the 21–22-year-old rate and the National Living Wage by increasing the 21–22-year-old rate to £9.18. 
  • To introduce a rate of £6.83 for 18 – 20 yr. olds and a rate of £4.81 for 16 – 17 yr. olds. It is hoped that bringing this in will help with staying in line with underlying wage growth but ahead of inflation for those under 20 who are at a greater risk of unemployment. 
  • An increase to £4.81 in the Apprentice Rate. 
  • Accommodation Offset Rate should be increased in line with underlying wage growth to £8.70. The Accommodation Offset rate is used when calculating the National Minimum Wage or National Living Wage where an employee is provided with accommodation from their employer.
  • The removal of Regulation 57(3) of the National Minimum Wage Regulations. This applies to live-in domestic workers who are treated as a member of the family and are therefore not entitled to National Minimum Wage or any salary at all.

National Minimum Wage Rates 2022-23

The updated rates from April 2022 are set out below:-

  23 and over 21 to 22 18 to 20 Under 18 Apprentice
April 2021 (current rate) £8.91 £8.36 £6.56 £4.62 £4.30
April 2022 £9.50 £9.18 £6.83 £4.81 £4.81

What does this mean for you as an employer?

You should ensure if you employ any persons who fall within these categories are transferred to the new rates. 

If you provide accommodation for staff, you should also keep an eye out for any changes to the rate, as the LPC has talked about changes in the future. 

You should also make sure that the payments of benefits in kind, i.e., fuel allowance/meals/medical insurance/childcare vouchers do not mean that an employee’s average hourly wage falls below the minimum wage. 

You should also continue to keep records to show that you are paying national living wage – it is a criminal offence to fail to have these records. 

Employers should also continue follow the regulations or face having their name being put into the public domain by the Government, who are prepared to ‘name and shame’ companies who do not pay minimum wage.

If you have any queries or concerns around these changes then you should speak to your advisers who can help you navigate the changes and help you to ensure you are compliant with them.

For more information on how we can help you and your business please contact us at info@oldfieldadvisory.com or call 02476673160.

Please note: This article is provided for information only and was correct as at time of writing (10/03/22). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.