National Minimum Wage Increases effective April 2020
Is your business planning for higher employee costs in 2020?
In an announcement on the final day of 2019, the government said the national living wage for over-25s would increase from £8.21 an hour to £8.72 from the start of April.
Pay rates will also rise across all other age groups, including by 6.5% for 21-24-year-olds to £8.20, by 4.9% to £6.45 for 18-20-year-olds, by 4.6% to £4.55 for under-18s and 6.4% to £4.15 for apprentices.
The new rates from April 2020 (See graph below) exceed both inflation and the current national wage growth rates. For employers paying the minimum wage to a large part of their workforce, a wage increase of 6.2% for workers represents a substantial change in overall costs for employers in already uncertain trading conditions.
The latest government announcement does not meet the level outlined by the Living Wage Foundation charity, which sets a voluntary pay floor used by about 6,000 companies calculated to reflect what people need to live on.
The Living Wage Foundation sets its “real living wage” at £9.30 an hour and £10.75 an hour in London. Firms including the insurer Aviva, the Nationwide building society and football clubs such as Crystal Palace are among employers committed to paying the real living wage to more than 210,000 workers.
Need help with planning for the increase or want to know what it will cost your business?