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National Living Wage to increase next year by 6.6%, to £9.50 an hour

Makbool Javaid, Partner - Simons Muirhead & Burton

The government has announced in the 2021 Budget that the National Living Wage will increase to £9.50 from April 2022. Ministers have accepted the Low Pay Commission’s recommendation for a 6.6% increase from £8.91, which applies to workers aged 23 and over. For those aged 21 to 22, the minimum will increase from £8.36 to £9.18.

The Low Pay Commission (LPC) is an independent public body that advises the Government each year on the National Minimum Wage and National Living Wage. The LPC is a social partnership body, made up of nine Commissioners: three from employer backgrounds, three from employee representative backgrounds, and three independents, including the Chair. This year, Government has accepted in full the recommendations made by the LPC.

The key points for employers are:

  • Keep a record – under the National Minimum Wage Regulations there is a requirement to maintain sufficient records to show that the National Minimum Wage has been paid for at least the last 3 years.
  • Be aware of deductions – if employees opt for increased pension contributions, for example, this may take their average hourly wage below the National Minimum Wage
  • Consider employees’ working time – if there are mandatory tasks your staff must do before and after they start work these processes may be included in working time.

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