Your Guide: UK National Minimum Wage Increases 2023
- By Harri Insider Team | April 27, 2023
The National Minimum Wage (NMW) officially increased in the UK on 1st April 2023. The new rates secure a livable wage for all workers, especially within the hospitality sector, where low-pay roles and turnover are more common.
Employers have a responsibility to evaluate how new wages will impact their workforce and employment practices. In this blog, you’ll find a complete outline of the 2023 requirements for workers of all ages and actionable advice to remain compliant below.
Save this link as your simplified guide to proceed with confidence around:
- The age-specific UK minimum wages employers need to know about
- Updated 2023 wages and adjustments
- Compliance measures that can save organisations from hefty fines
The UK Minimum Wages Employers Need to Keep Tabs On
The 2023 minimum wage increases will impact most workers, but their age and location will guide exactly what the updated rates are. Before we share the new wages, we’ll step back to understand the various wage categories that apply to UK employment.
UK National Minimum Wage (NMW)
The National Minimum Wage ensures employers will pay all workers in the UK a fair wage for their work. Businesses are legally required to pay employees at least the minimum wage, although organisations may choose to pay above it.
The government sets the minimum hourly rate for workers in the UK. It is subject to change yearly and an employee’s age will inform the minimum rate each worker gets paid. Apprentices are entitled to a specific Apprentice Rate if they’re under 19 or in their first year of apprenticeship.
Anyone at school leaving age (16) receives the National Minimum Wage until they become eligible to receive the National Living Wage.
UK National Living Wage (NLW)
The UK National Living Wage applies to any worker above 23 who is not in their first year of an apprenticeship. This rate also jumped slightly between 2022 and 2023.
The wage increases that went into effect on 1st April 2023 resulted from advice that the Low Pay Commission (LPC) provided amidst a growing cost of living crisis. You’ll see how workers of all ages experience the shift with our full breakdown below.
Recommended Living Wages
Outside of the national living wage, there are a few other recommended rates in place that are higher in some areas and can give employers an edge to attract talent within a competitive hospitality sector.
The Living Wage Foundation recommends the following rates to give workers a wage that accurately reflects the cost of living:
The London Living Wage: Currently at £11.95, this hourly rate is calculated independently to reflect London’s high cost of living and give workers enough compensation to afford living essentials.
The Real Living Wage: Currently at £10.90, this hourly rate is similar to the London Living Wage but applies to the rest of the UK as an optional guide for employers who look to support their workers further to minimum wage requirements. Over 12,000 UK businesses voluntarily pay the Real Living Wage.
Updated 2023 UK National Minimum Wages
The National Minimum Wage increased on 1st April 2023, following advice from the Low Pay Commission (LPC) amidst a growing cost of living crisis. UK hospitality operators will benefit from a strong awareness of all wage changes to avoid fines with fair and compliant payment practices. Getting ahead will support new hires and existing employees who age into new pay brackets.
| Pay rate | NMW rate | Annual increase (£) | Annual increase (percent) |
|---|---|---|---|
| National Living Wage (23+) | £10.42 | 0.92 | 9.7 |
| 21-22 Year Old Rate | £10.18 | 1.00 | 10.9 |
| 18-20 Year Old Rate | £7.49 | 0.66 | 9.7 |
| 16-17 Year Old Rate | £5.28 | 0.47 | 9.7 |
| Apprentice Rate | £5.28 | 0.47 | 9.7 |
| Accommodation Offset | £9.10 | 0.40 | 4.6 |
The High Cost of Non-Compliance
In 2021 alone, a total of 191 companies that included big names like John Lewis, The Body Shop International, and Sheffield United FC were named and shamed for failure to pay the National Minimum Wage requirements and fined in the millions.
There’s no doubt that penalties add an unexpected financial strain, but they also appear in the news to tarnish the reputation that hospitality employers rely on so heavily. Organisations that rely on manual processes for identifying team birthdays and age records can easily find themselves in a less-than-ideal position when such changes occur.
The HM Revenue and Customs (HMRC) enforces minimum wage payment by taking firm action against any employers who they find to be in violation. These actions can include:
- Criminal legal proceedings
- Fines up to £20,000 for each employee or worker affected
- Inclusion on a Business, Energy and Industrial Strategy (BEIS) public list
How to Remain Compliant
1. Review your payroll processes
Review your current pay rates with the chart above to ensure you pay all employees at least the National Minimum Wage. Quickly identify any employees currently paid below the new rate so you can notify them and adjust their pay accordingly. Accurate records of all employees, birthdays, wages, and hours worked are critical to your business’s compliance, especially when wages and rate requirements shift.
2. Adjust both hourly and salaried employees
The 2023 minimum wage requirements apply to both hourly workers and salaried employees. As a hospitality organisation, you likely employ a mix of both pay structures. Still, any worker who receives an annual salary must also meet the National Minimum Wage requirements. For example, someone who is 30 and works 35 hours weekly must still receive an annual salary of at least £19,964.
You can look at a salaried employee’s weekly or monthly pay totals and divide them by the hours they work to ensure they receive fair pay. To be prepared for new hires, you can also carve out some time to carefully review your existing employment contracts and make any necessary changes to remain compliant.
3. Provide the right benefits
Compliance will go beyond wages. It’s also important to ensure all employees receive competitive and fair benefits that support their health and well-being. Benefits can include holiday pay, sick pay, and breaks, based on each worker’s contract.
Benefit distribution and confirmation is another area where organisation and record-keeping in your talent management system of record will help you stay compliant.
4. Overcommunicate with your teams
As you’re learning about wage increases, your workers are too. They will likely have some questions you can get ahead of. The best approach is to be proactive with your communication by letting employees know about the wage changes that will impact their pay.
Focus on open communication and precise detail about when exactly each worker will receive an updated paycheck. Your designated employee communication application or channel is a great place to share updates so no one misses out on key logistics.
Navigate Minimum Wage Changes With Harri
A small wage change can feel like a lot of work for employers, but that’s where the Harri team comes in to help. Employers using Harri’s organised and compliant workforce management solution can automatically change workers’ pay rates in bulk based on age, position, or location as requirements shift.
You can avoid costly and unexpected fines when you take the necessary steps to comply now. More importantly, you do the right thing with the talent that fuels your business success today and the employee retention efforts you have to keep top performers fulfilled and satisfied in the future.
Curious about how Harri helps your workforce? Chat with our team today to learn how our unparalleled employee experiences drive business performance globally for over 20,000 restaurant and hotel locations.
