18th January 2024
As we start 2024, employers need to be aware of some important employment law changes that they must be prepared to navigate, whilst providing the necessary support for their employees. One of the most significant changes to be introduced in 2024 is the increase in the National Living Wage. This is the biggest increase the UK has seen, with it jumping from £10.42 per hour to £11.44 for employees, which is the equivalent of almost 10 per cent.
New laws for both the National Living Wage and National Minimum Wage are due to be introduced from April 1, 2024. The government is also planning to change who is eligible for the living wage, ensuring that individuals who reach the age of 21 will receive the full amount. The amendments for both minimum and living wage for all ages is as follows:
It is important to note that the threshold for the National Living Wage is currently 23 years and above, but this will be extended to include those aged 21 and over.
Despite the National Minimum Wage rates being set by an hourly amount, this does not mean that it is limited to employees that are paid by the hour. The rate applies to all employees across the UK including those who work offshore, trainees and part-time or casual workers. The new wage rates will be the same across Scotland, Northern Ireland, Wales, and England and will be introduced on the same date everywhere.
For those who are self-employed, unpaid volunteers or company directors, these legal requirements do not apply, and they are not entitled to the minimum wage. This can also be true for family members who are living with their employer.
The new adjustment will require employers to update their payroll systems to reflect the new rates. which are scheduled to rise from April 2024. It may be beneficial for employers to check their current records to ensure accuracy of employees’ birth dates to better manage the transition between the different wage categories.
To ensure that each employee’s pay is adjusted in line with the new rates, employers should regularly review their records, paying careful attention to those approaching the key ages (17, 20 and 22 years). It is imperative to ensure that for those employees on fixed salaries, their total earnings divided by total hours worked meet or exceed the appropriate National Minimum Wage or National Living Wage.
There are serious legal consequences for those employers who do not manage and adhere to these new wage standards. The significance of these consequences is huge as employers could face fines of up to £20,000 per employee and could also potentially be disqualified from holding a director position. If you should discover any discrepancies, legal advice should be sought promptly to prevent consequences or incorrect information moving forward.
Our employment law team are here to guide you through these changes and ensure that you as an employer are compliant with the new wage rates. If you need assistance managing rates per age group or are unsure of what the best process would be for your payroll and business, feel free to get in touch today and we can lend a helping hand. Any further questions or for more information regarding this topic please contact Sarah Everton, Head of Employment Law on 01782 525012 or email firstname.lastname@example.org.