Autumn Statement 2023: UK minimum wage rises announced

Employment law expert Jon Fisher said the review was necessary after the government announced that NLW rates will rise from April 2024.

Trailing chancellor Jeremy Hunt’s autumn statement on Wednesday, the Treasury and Department for Business and Trade confirmed on Tuesday that it would extend the maximum NLW rate currently only available to those aged 23 and over, to 21-year-olds, and increase the hourly NLW rate for those workers from £10.42 to £11.44.

The government also confirmed that the NLW rate for 18- to 20-year-olds will also rise from £8.60 per hour to £9.71 per hour, and that the apprentice rate will also rise – from £5.28 an hour to £6.40 an hour.

The government said that, for a full-time worker aged 21, the NLW rate rise will mean an annual pay rise of almost £2,300.

Fisher said NMW legislation was now a relevant consideration for far more employers due to the significant increases in recent years.

“It's a mistake just to think about hourly paid employees, as the higher rates increasingly bring salaried employees close to the minimum,” Fisher said. “Once the increase takes effect, the minimum annual salary for a worker aged over 21 working for 37.5 hours per week will be more than £22,300.”

“Even where an employee's headline rate is more than the new minimum, employers will need to review the position carefully due to the complexity of the NMW calculation. This is particularly relevant where employers operate salary sacrifice schemes, such as for pension contributions. Employees must not be allowed to sacrifice their pay to below the NMW, and employers should ensure that their payroll systems have measures in place to prevent this from happening,” Fisher said.

“Most benefits and many pay premiums do not count towards NMW. Employers who are concerned about affordability may want to consider consolidating those benefits and premiums into the basic rate. That will often involve a change to contractual terms, and so employers looking to do this before the new NMW rate takes effect in April will need to kick off discussions as soon as possible,” he added.