The National Living Wage rates are due to increase on the 1st of April. Those working alongside us in the membership and association sector will know how valued our colleagues are, and while they traditionally cannot match large corporate salaries, membership bodies are generally supportive of a fair rate of pay.
For those of who you have always set your rates above the National Living Wage, there is a risk this April that the large increase will draw your fair wage closer to the NLW gap. You may find that entry level salaries which were comfortably above the NLW, are suddenly very close to it.
It’s a legal requirement that employers must pay all staff at least the NLW, but we predict that this may catch some well-intentioned employers whose rates, even just last year, were above the statutory minimum.
Many companies, especially within the membership and association sphere, instead choose to benchmark their salaries against the Real Living Wage. Thousands of SMEs around the UK volunteer to pay their employees above the NMW and pay salaries in line with the current cost of living. This is calculated by the Living Wage Foundation every year.
A recent publication from the Office of National Statistics has stated that around 4 in 10 energy bill payers are struggling to afford payments, and that 44% of adults in Great Britain are using less gas and electricity because of the rising cost of living. The Real Living Wage increased from £10.90p/h to £12.00p/h at the end of last year, meaning pay rates are now worth over £3,000 a year more.
| Government National Minimum/Living Wage (April 2024) | |||||||
| Real Living Wage | National Living Wage | 21-22 | 18-20 | U18 | NMW Annual Increase | RLW Annual Increase | |
| 2024 | £12.00 | £11.44 | £11.44 | £8.60 | £6.40 | 1.02 | £1.10 |
| 2023 | £10.90 | £10.42 | £10.18 | £7.49 | £5.28 | 0.92 | £1.00 |
| 2022 | £9.90 | £9.50 | £9.18 | £6.83 | £4.81 | 0.59 | £0.40 |
| 2021 | £9.50 | £8.91 | £8.36 | £6.56 | £4.62 | 0.19 | £0.20 |
| 2020 | £9.30 | £8.72 | £8.20 | £6.45 | £4.55 | 0.51 | £0.30 |
| 2019 | £9.00 | £8.21 | £7.70 | £6.15 | £4.35 | 0.38 | £0.25 |
| 2018 | £8.75 | £7.83 | £7.38 | £5.90 | £4.20 | 0.78 | £0.30 |
If inflation has brought your current salaries close to NLW rates, you need to be aware that some deductions from pay could push your employee’s hourly rate below the threshold.
In sectors where it is common to make deductions for items like uniforms or tools, the issue should be easily avoided, but there are some less obvious deductions which can affect other sectors.
Problems may also be caused by beneficial salary sacrifice schemes, such as private pension contributions, healthcare schemes, or even the cycle to work scheme. Even one-off deductions can land employers in hot water if it reduces pay below NLW rates in the pay reference period. This could apply to such diverse examples as a lump sum pension payment, or even some legitimate deductions from wages at the end of employment.
It’s important to familiarise yourself with the wage changes and keep an eye on how any deductions might affect your employees. Failure to adhere to this, even if accidental, may lead to criminal proceedings. Always seek professional advice if you are unsure.
Even if you are confident that your salaries comply with the NLW legislation, it is worth considering whether you can offer a pay rise to your staff to help alleviate the strain caused by the cost-of-living crisis.