National Minimum Wage Increase – April 2021 – how will your business be affected?
As is usually the case each year, from 1st April 2021 the National Minimum Wage (NMW) will increase. This rate is also referred to as the National Living Wage (NLW).
Given that we are in an economic crisis, and pandemic, organisations may not have been expecting these increases to take place this year. The increases can raise concern that organisations who are already struggling to keep their businesses afloat now need to find additional funds to increase salaries further. However, when making these decisions, the cost of the increase is always balanced against the benefit it brings to employees earning this level of pay. This year, around 2 million people are expected to benefit from this increase.
If you have staff who are currently furloughed, this year it is important to remember that these staff must be paid at least NMW for any work / training they undertake – remember to pay this at the correct rate from 1st April.
National Minimum Wage
The National Minimum Wage will see increases across all age brackets. However, this year the increases are smaller for those under 23 due to the risks to youth unemployment due to the current economic situation. The exception to this is the Apprentice rate, which has the highest increase this year.
Important Note – The National Living Wage Rate will now be extended to staff who are aged 23 and above. It is currently only payable to those aged 25 and above.
This means in reality, that for workers aged 23 and 24, their pay rise will amount to just under 9%.
The National Minimum Wage Rates – comparison of 2020 to 2021
|Rate from 1 April 2020||Rate from 1 April 2021||Increase|
|Aged 25 and above (NLW)||£8.72||£8.91||2.2%|
|23 and 24 year olds||£8.20||£8.91||8.7%|
|21-22 Year Old Rate||£8.20||£8.36||2.0%|
|18-20 Year Old Rate||£6.45||£6.56||1.7%|
|16-17 Year Old Rate||£4.55||£4.62||1.5%|
If you have any questions around these rates, please contact us for further advice.