NLW Updates for Employers

Upcoming Changes to The National Living Wage: What Every Employer Needs to Know

What is the National Living Wage? 

The National Living Wage in the UK is the minimum pay per hour almost all workers are entitled to within the UK.  The pay rates are calculated annually by the Government, with recommendations from the Low Pay Commission, and are in place to increase the income of the lowest paid workers.

What’s Changing in April? 

From April 2025, the National Living Wage in the UK will increase to £12.21 per hour. This represents a 6.7% rise from the previous rate of £11.44. 

In addition to this increase, the Government will also be making changes to National Insurance Contributions (NICs). 

Starting April 2025, employers will face a two-pronged change in NIC obligations: 

• The employer NIC rate will rise by 1.2 percentage points, shifting from 13.8% to 15%. 
• The earnings threshold at which employers begin paying NICs will be reduced from £9,100 to £5,000 per year, meaning a larger portion of wages will be subject to NICs. 

It is vital that businesses are aware of these changes and prepare for their implementation. 

What are the Consequences of Non-Compliance? 

As a business owner, it is essential that you plan for these changes in advance. No matter how small your organisation is, you must comply with National Living Wage rates. Non-compliance with minimum wage regulations is illegal, and can lead to penalties such as backpay, fines up to £20,000 per worker, and potential criminal proceedings.

What Else do I Need to Consider? 

As well as the hourly rate increases, employers need to consider other factors, such as Holiday Pay (WTD), Employers National Insurance Contributions (ENIC) and Pension Contributions. 

You should also consider any Apprentices that you may have, as they are covered by National Living Wage regulations, and their rates will vary according to their age. 

For each permanent employee, working 37.5 hours per week and paid the NLW, employers will face additional annual costs of approximately £1720 per worker.

These cost increases come at a time when many businesses are already struggling with general cost of living cost increases and fluctuating demand for products and services.  Absorbing these costs will be challenging for many.  

 So, what can you do to help prepare for the National Living Wage rates increase? 

How Can I Prepare for the Changes? 

It is vital that workers’ pay rates remain in line with the new National Minimum Wage or National Living Wage, and employees are communicated to about any changes to their employment contracts.  

If you have not yet started planning for these changes, it is a good idea to start now. You should complete a full financial audit of your employees to identify all those who will be affected by the new rates change.

What Questions Should I Ask? 

Some questions you might want to consider when doing your planning, are explored below. 

• How many permanent staff will be affected and what are the cost implications? 
• What is the impact on your recruitment strategy for permanent staff? 

If you currently outsource any of your work to a temporary recruitment agency, now is a good time to review the relationship to ensure you are getting maximum value for money.   

Remember, cheapest isn’t always best!  You should consider: 

• How quickly are they able to fill your bookings?  
• Do the workers supplied exactly suit what you are looking and paying for? 
• Do the workers tend to stay for the duration of the assignment, or are they constantly being replaced? 
• Do they provide local recruitment strategies to find the best candidates? 
• If you operate across multiple sites, do they offer localised recruitment for each location? 
• Do they provide a personalised service – either at branch level, or centrally? 
• Do they provide thorough checks and inductions for their workers – or do they leave this to you?  
• Do you have a dedicated point of contact to save you time and effort?  
• Do they provide centralised worker pay-roll – or is that something you have to do? 

What Support is Available for Me? 

The Best Connection is one of the UK’s premier providers of flexible staffing solutions. With over 85 branches across the UK, we offer localised workforce planning for businesses of all sizes and sectors. 

Alongside the many benefits we offer to our clients, we take responsibility for managing all payroll changes of temporary workers and communicating any pay rate changes, alleviating the burden on them and freeing up their time to focus on other things.   

Our trained consultants understand the challenges your business is facing and are here to help. If you are considering making changes to your workforce, or your recruitment strategy, we will support you all the way.    

For example, if you are considering downsizing your workforce but have concerns about meeting seasonal demand, we can implement a temporary recruitment plan to keep you ahead of the game and manage your wage costs. 

Additional benefits of partnering with The Best Connection include:  

• Dedicated account management.  
• Flexible working relationships.  
• Centralised in-house payroll handling for temporary workers.  
• All advertising, pre-screening, and interviewing will be done for you – saving you time and money! 

Next Steps 

If you already have a relationship with The Best Connection, your Account Manager will shortly be in touch to start planning for the changes. 

If you are not a client but would like to speak to us about how we can help you implement these changes, please contact our Central Sales Specialists on 0121 504 3090.  Alternatively, click here to find your local branch.