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National Minimum Wage 2024 - 5 key factors for businesses

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National Minimum Wage 2024 - 5 key factors for businesses

National Minimum Wage 2024 - 5 key factors for businesses

The chances are by now you’ve heard that there will be an increase in the National Minimum Wage in the UK from 1 April 2024.

The Government released a statement in November 2023, stating that “this will be the largest ever increase in…cash terms and the first time it has increased by more than £1.

The size of this increase is driven by the strength of pay growth across the economy, which is forecast to continue into next year.”

What does this mean for businesses across the UK? Our Regional Manager Ed Bryant, a specialist in large temporary work placements, and Professional Services Recruitment Specialist George Jackson explore the top 5 key factors for businesses to take into consideration.

 

1. The figures

 

Over 21

The National Minimum Wage will be £11.44 from 1st April 2024, an increase from £10.42. This now applies to anyone over 21, whereas previously it only applied to anyone over 23.

In salary terms, this means that someone in a full-time permanent role working a 40-hour week will earn a gross annual salary of £23,795.20, up from £21,673.60.

18-20 year olds

From 1st April 2024, the National Minimum Wage for 18-20 year olds will be £8.60, up from £7.49.

In salary terms, someone in full-time permanent employment working a 40-hour week will earn a gross annual salary of £17,888.00 up from £15,579.20.

16-17 year olds

From 1 April 2024, the National Minimum Wage for 16-17 year olds and apprentices will be £6.40, up from £5.28.

In salary terms, someone in full-time employment working a 40-hour week will earn a gross annual salary of £13,312.00 up from £10,982.40.

National Insurance thresholds are also going down in January 2024, from 12% to 10%.

  From 1st April 2024 Pre 1st April 2024
Over 21 £11.44 Age 21-22 £10.14

23 and over £10.42

18-20 £8.60 £7.49
16-17 £6.40 £5.28

For more information, visit the Government website here.

2. Salary review across the business

 

“Following the wage increase, it will be prudent for businesses with employees at various salary levels to conduct a comprehensive overall review,” says Ed.

“An increase in the salaries of the lowest paid workers will shorten the gap between them and employees in the next band up, and the next band up from them and so on.”

Adjustments may be necessary in the salaries of higher-paid workers to reflect the differences in skills. Market insights of similar businesses can offer valuable benchmarks and help understand what is competitive.

 

3. Retention

 

What happens if the prospect of raising wages across the board is a difficult one? This may be true for many businesses. If you are unable to offer a salary increase to other employees, reviewing your benefits offering is possibly the next best thing.

“Enhancements in holiday and pension entitlements, investment in training and hybrid working can all work towards ensuring your company is a great place to work,” says George. “Checking out job posts on platforms like Indeed and Linked In can provide valuable information on current industry benefits being offered. We can also provide market insights to further guide decision-making.”

4. Blending: A strategic approach

 

Some businesses are adopting a blending strategy, which involves implementing a smaller increase in wages in the months leading up to April, followed by a second increase when the new minimum wage comes into effect. This approach serves a dual purpose. Firstly, it tests the financial strain on the business at a lower level. Secondly, it makes the increase in April less of a shock financially. We recommend reviewing industry salary benchmarks to see what other businesses are putting into place.

 

5. The wider effect: being prepared

 

As of April 2024, there may be an impact on overall costs within businesses and on growth plans. There may also be an impact on the cost of goods and services that we consume. Whilst it is positive and necessary to support the cost of living for workers on the minimum wage, on a wider scale we may see a ripple effect across businesses, including longer waiting times in industries such as production, warehousing, delivery, and hospitality.

 

For more information, an informal chat and free-of-charge, impartial market insights on any of the above, feel free to reach out to Ed Bryant and George Jackson or call 01242 505400.

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