National Living Wage changes: have you updated your payroll systems?

Employers have been reminded to update their payroll systems following a rise in the legal minimum wage.

The warning comes as both the National Living Wage (NLW) and National Minimum Wage (NMW) increased for workers on 01 April 2021.

Under the new rates, the NLW has increased by 2.2 per cent, from £8.72 per hour to £8.91 per hour.

And for the first time ever, the NLW has been extended to 23 and 25-year-olds, representing a pay rise of almost nine per cent.

Commenting on the new rates, Bryan Sanderson, Chair of the Low Pay Commission, said: “This week’s increase in the NLW is our first step towards the Government’s target of two-thirds of median earnings. It is a real-terms increase, meaning that an hour’s work can buy more than it could last year, at the start of the pandemic. The level of the new rate however also reflects the need to protect workers from job losses.

“Importantly, the NLW will now apply to workers aged 23 and over. This is an important change which is strongly endorsed by the Commission. Young people should be fairly rewarded for their work. We will seek to understand how young people’s pay and employment are affected by this in our consideration of a further reduction in the NLW age qualification to 21.”

Following the changes, employers have been reminded to update their payroll systems to reflect the new rates of pay.

The maximum fine for non-payment is £20,000 per worker, while serial underpayment can result in employers being publicly “named and shamed”.

According to the latest statistics, fines for underpayment of the legal minimum wage increased by 24 per cent in 2020 compared to the previous year.

For help and advice with related matters, please get in touch with our expert payroll & HR team today.

Posted in Payroll.