Changes to The NLW

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

What is the National Minimum Wage?

The National Minimum 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.

How is this Different to the National Living Wage?

The National Living Wage is higher than the National Minimum Wage and it is currently available to lower-paid workers aged 23 and over. At present the National Living Wage hourly rate is £10.42.

What's Changing in April?

On 1st April 2024, the UK National Living Wage will increase by almost 10%, with an increase of over £1.00 per hour for the first time ever, taking it to £11.44 per hour.

In addition, the age threshold has been dropped from 23 to 21 - meaning more workers are now eligible. The Department for Business and Trade (DBT) estimates that about 2.7 million people will be impacted.

This is undoubtedly great news for lower-paid workers across the country - but what does it mean for their employers?

What are the Consequences of Non-Compliance?

Businesses must be prepared 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.

When all these factors are taken into account, the overall cost of employing permanent staff is set to rise by 10% from April 2024, marking the largest single increase in 25 years.

Whilst no one is questioning the need for financial protection for low-paid workers, these cost increases come at a time when many businesses are already struggling with rising energy prices, increased interest rates and reduced 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.

We work closely with our clients each year to keep them informed of such industry changes.

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.

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.

The Best Connection is one of the UK's leading providers of temporary workforce solutions. For over three decades we have proudly served and supported our clients and candidates across multiple industry sectors, delivering our best-in-class customer service. To find out more how we can help you find your next role visit our website: https://thebestconnection.co.uk.