Follow up

Providing NMW statement

[Letter]

Government press release

[Weblink]

Annual minimum wage increases

Hourly rate increases. The government has accepted the recommendations of the Low Pay Commission, so from 1 April 2023: (1) the national living wage (NLW) rate for workers aged 23 and over will rise from £9.50 to £10.42 per hour, its largest ever annual increase; (2) the national minimum wage (NMW) rate for workers aged 21 and 22 will rise from £9.18 to £10.18 per hour; (3) the NMW rate for workers aged 18 to 20 will rise from £6.83 to £7.49 per hour; (4) the NMW rate for workers aged 16 and 17 will rise from £4.81 to £5.28 per hour; and (5) the NMW apprentice rate will rise from £4.81 to £5.28 per hour (see Follow up ). The accommodation offset, which enables employer-provided accommodation to be taken into account when calculating the NLW/NMW, will rise from £8.70 to £9.10 per day.

Pro advice. If you have workers who are paid at NLW/NMW rates, advise them of the forthcoming annual increases (see Follow up ).

Pro advice. The government’s targets for the NLW to reach two-thirds of median earnings by April 2024, and for the NLW age threshold to be lowered to workers aged 21 and over from the same date, remain on track.

Overtime reduction. It’s unlawful to subject a worker to a detriment because they qualify for the NLW/NMW or a particular rate of it. If you now wish to consider reducing the amount of available paid overtime to fund these NLW/NMW increases, it’s possible this could result in detriment claims. If you reduce overtime across the board, you may be able to show that the reason is business need rather than because a particular worker qualifies for their NLW/NMW rate. Conversely, where you only target those receiving the NLW/NMW, or a particular rate, it’s more likely you’ll be caught by the detriment provisions.

Pro advice. In any event, whether you can reduce overtime will depend on whether it’s guaranteed as a contractual right. If it is, you’ll first need worker consent to reduce it. Even if overtime isn’t guaranteed, consultation is still important before taking any decisions.

Government press release

Letter providing NMW statement