Emergency break to be placed
on NMW & NLW?
Plans to increase minimum wage and living wage in April 2021 are likely to be put on hold due to the coronavirus pandemic.
Read below to find out more....
Concerned about the effect the increase to the NMW & NLW currently scheduled for April 2021 could have on your business? You're not alone.....
For the 2021/22 tax year, the living wage was expected to rise from £8.72 to £9.21 per hour however it has been recently reported that Chancellor Rishi Sunak could be forced to pull back on this planned increase due to the ongoing effects that the coronavirus pandemic has had on the country. This report comes after the Low Pay Commission recently warned about fears that companies may not be able to afford a rise in their employees’ wages and that increasing the rate could lead to a steep rise in unemployment.
It is seemingly unlikely that the Government will introduce measures to assist businesses in meeting rising cost or costs which are already in place with regards to the National Minimum Wage (NMW) and National Living Wage (NLW). However, a recent report by national media suggests that the Government may be considering scrapping the annual increase of the NMW and NLW next year – being referred to as an ‘emergency break’.
A target had been previously set by the Chancellor that would see the rate increased to the equivalent of two-thirds of the country's median earnings by 2024. However, if evidence suggests the planned increase would be 'damaging for the lowest-paid workers,' the commission could trigger the emergency break.
Ahead of the Autumn budget, the commission will meet to discuss what living wage recommendation to give to Chancellor Sunak.
Currently, the national living wage applies to those who are 25 and over, while younger workers receive the lower national minimum wage, but from April, the wage was due to be extended to 23 and 24-year-olds.
As of April 2020, minimum wage sits at £4.15 for apprentices, £4.55 for under 18s, £6.45 for 18 to 20s and £8.20 for 21 to 24-year-olds.
In comparison, April 2019 to March 2020, it was £3.90 for apprentices, £4.35 for under 18s, £6.15 for 18 to 20s and £7.70 for 21 to 24-year-olds. The living wage was £8.21.
Whilst this 'emergency break' has not yet been confirmed by Government, it is worth bearing in mind the two possible outcomes when forecasting for 2021/22 with regards to NMW & NLW and contemplating how it could affect your business.
To find out more, visit gov.uk
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