In his November 2020 comprehensive spending review, Rishi Sunak confirmed that the National Living Wage (NLW) will increase 2.2% to £8.91 from 1 April 2021 and will become available to people aged 23 and above, down from the current age of 25.
The National Minimum Wage (NMW) will continue to apply below the age of 23. The increases are in line with the recommendations of the Low Pay Commission.
The reduction in qualifying age for NLW means that from 1st April the position will be:
| Age | NLW/NMW Rates from 1st April 2021 |
| 23 and over (NLW applies) | £8.91 |
| 21 to 22 (NMW applies) | £8.36 |
| 18 to 20 | £6.56 |
| Under 18 | £4.62 |
| Apprentice (applicable to apprentices aged
under 19 or in the first year of apprenticeship, otherwise rates are applied based on the age bands shown.) |
£4.30 |
There are a number of traps which can catch out unwary employers, the most common of which include:
Record Keeping: Employers are required “to maintain sufficient records to evidence that the NMW has been paid for at least the last 3 years.” It is a criminal offence not to do so and a presumption that an employee has not been paid the NMW unless an employer can prove to the contrary.
Effect of deductions: Some employers may allow employees to opt for increased pension contributions or childcare vouchers in return for a reduction in their gross salary. Such reductions must not take the employee’s average hourly pay below the NMW. If employers stipulate that employees must conform to a specific dress code (in industries such as hospitality etc) or must provide any tools or equipment to fulfil their duties the cost of such items must be considered in determining whether the relevant NMW rate has been paid.
What are working hours: Working hours may not be obvious. If an employee has to carry out mandatory tasks before or after a “normal working day” the time spent will constitute working hours. Likewise, if someone is essentially based at home and has to travel to site (e.g., an engineer on emergency call out) then travel time will be part of working hours. As can be seen, there are a number of complexities around what may initially seem fairly straightforward regulations. If there is any room for doubt employers should seek specific advice.
Disclaimer: The information in this article is provided for general information only and does not constitute legal or professional advice. We cannot accept responsibility or liability for any actions you may take, or not take, based on this information.
