January 2020 – New National Minimum Wage and National Living Wage Rates
Employment Update for Small Businesses
Happy New Year!
Last month we alluded to the proposed changes to IR35 that are scheduled for April. However, before the election the new Government promised to review this change if elected, so I suggest you do not take any steps at the moment and we will update you in February’s or March’s newsletter if we hear more (once again with the caveat that we are not tax specialists!)
The only real employment law news this month is that the new rates for the National Minimum Wage and the National Living Wage have been confirmed. They take effect from 1st April 2020 and the details are set out below.
You will also find details of an offer on our recommended HR system, breathe.
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From 1st April 2020, the National Living Wage and National Minimum Wage rates will increase as follows:
to £8.72 per hour (from £8.21) for workers aged 25 and over
to £8.20 per hour (from £7.70) for workers aged 21 to 24
to £6.45 per hour (from from £6.15) for workers aged 18 to 20
to £4.55 per hour (from £4.35) for workers aged 16 and 17
to £4.15 per hour (from £3.90) for apprentices under 19 and those over 19 in their first year*
*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.
The National Living Wage (the £8.72 rate that will apply to 25 year olds) is increasing by 6.2%, which is more than four times the rate of inflation. It is likely, therefore, that such a sharp increase will prove challenging for those businesses that rely on workers at the lower end of the pay gradient (such as care, hospitality and retail). However, a 25 year old who works 40 hours per week will now be entitled to an annual salary of just over £18,000, so the knock-on effect my be felt in other industries.
If you have some staff on lower salaries, you will need to keep watch on the hours they work and check to ensure that you are complying with the minimum wage legislation, as penalties can be very severe for getting it wrong.
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HR Software for Small Businesses
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