Are you ready for April’s wage rate changes?
In April 2023, the UK will see a range of changes to the national minimum wage, statutory maternity pay and statutory sick pay which will affect employers nationwide. If your business isn't ready, it's essential you take the necessary steps now to ensure you are fully compliant and avoid costly fines or penalties.
To prepare for the new regulations, employers should start by understanding exactly what the changes involve and how they could impact their business. So let us help you.
Starting with the National Living Wage (which applies to workers aged 23 and over), the rate will increase from £9.50 per hour to £10.42 per hour. That's an increase of 9.7%.
For the National Minimum Wage, the rate changes differ according to the workers age and are as follows:
· For workers aged 21 or 22, the rate will increase from £9.18 per hour to £10.18 per hour.
· For workers aged 18-20, their pay will increase from £6.83 per hour to £7.49 per hour
· Workers aged 16 or 17 will see their hourly rate increase from £4.81 per hour to £5.28 per hour.
· The apprentice rate will increase from £4.81 per hour to £5.28 per hour.
This is great news for workers but a possible headache for employers as they manage the initial change in April and all the subsequent changes as their employees celebrate new birthdays!
And to make things even more complicated, the rates above don't apply everywhere in the UK. If your business operates from sites in London, then you should be paying the London Living Wage which increased from £9.90 per hour to £10.90 per hour in September 2022. Even if your business is headquartered outside of London, any of your staff working in London will need to be paid this rate.
And of course, if your pension payments are linked to salaries, then these will need to be changed too.
There are also changes for statutory sick pay and statutory maternity pay. On 6th April, statutory sick pay will increase from £99.35 to £109.40 per week, while weekly payments for Statutory Maternity Pay, Statutory Paternity Pay, Shared Parental Pay, Adoption Pay, and Maternity Allowance, will increase from £156.66 to £172.48. Note, these changes come in earlier, on the 2nd April.
Failing to pay your staff the correct amount from April could lead to hefty fines and potential reputational damage so now is the time to triple check that you are ready. So what can you do?
Firstly, check your records of employee dates of birth are up to date, as well as agreed dates for maternity/paternity leave. This will not only ensure you know exactly how many people will be affected but it will also enable you to calculate how much your wage bill will be increasing each month and manage your budget accordingly.
Then check your payroll system can accurately calculate the new rates, especially those linked to age. If this is the case, it should be straightforward to switch over to the new rates from April. If the payroll system isn’t up to the job, it may be worth investing in a new system – the fines for non-compliance could be a lot more expensive long term!
Next, communication. Make sure you let staff know about the upcoming changes and have access to relevant information related to the new national minimum wage. At such a difficult time financially, this news could bring great relief to your employees and give everyone a much needed morale boost.
Your update to staff should also include details about how they can make a complaint if they believe they are not being paid correctly. Also, update your contracts, policies and procedures to reflect the new rates of pay.
Finally, budget for the cost of any additional pay and factor in the extra admin time. This last point may be the toughest one as businesses and consumers alike feel the impact of the tough economic climate. So, what do you do if that budget is not easily available?
Fortunately, there are a number of resources available to help. Employers may be able to take advantage of government grants and financial support if necessary.
After all, paying your employees incorrectly can be a costly mistake. If HMRC discovers you haven't given your staff their deserved wages, not only will you have to pay the full amount owed plus interest - but also face an extra fine of up to double that sum! Don’t take any chances – make sure those on your payroll are getting paid fairly and correctly - or it might sting later down the line.
Not being able to afford your employees' wages might be an alarming sign of deeper financial stress. If that's the case for your company, don’t wait – it’s best to act fast and contact a professional insolvency practitioner right away. An expert can help you get on top of any business issues, investigate potential solutions and move forward in the most efficient way possible.
Preparing for changes to national minimum wage, statutory sick pay and maternity pay can be daunting. However, these changes are a sign of progress – they demonstrate the UK’s commitment to creating better conditions for all workers. By considering the impact that these changes will have on your business now and in the future, you can ensure that you are ahead of the game. And, with companies like Lodge Court here to help manage your obligations, it’s easy to stay on top of whatever changes might come your way.
Whether you’re looking for advice on policies or assistance with implementing them, our team of industry experts are here when you need us most. So don’t hesitate any longer – get in touch with us today and let us help you keep your people on track.
Or you can visit us on stand 20 at the West Sussex Business Expo, hosted by B2BExpos on Wednesday 22nd March 2023 at Fontwell Park Racecourse. Click here for more info.