New Minimum Wage Rates Announced

2020 is set to be one of the busiest years yet for employment law developments.The government kicked off the New Year by announcing new minimum wage, family leave and statutory sick pay rates set to come into force in April 2020.

National Minimum Wage 2020 – and more

The rates

The existing structure, which provides separate hourly rates to staff based on separate age categories will stay in place. Individuals will benefit from an hourly increase of between 4.6 and 6.5 percent, depending on their age. These new rates are as follows:

• National Living Wage for ages 25 and above - £8.72 (6.2 per cent increase)
• 21 to 24-year-olds - £8.20 (6.5 per cent increase)
• 18 to 20-year-olds - £6.45 (4.9 per cent increase)
• Over CSA to 17 - £4.55 (4.6 per cent increase)
• Apprentices under 19, or 19+ but in first year of apprenticeship - £4.15 (6.4 per cent increase)

What’s the impact?

Firstly, almost three million workers in Britain are set to receive a pay rise of more than four times the rate of inflation. In real terms, this should equate to an increase of around £930 a year for a full time worker paid in line with the National Living Wage.

What are the other rates I should know about?

The government then followed up on this with proposed increases to additional statutory rates of pay. This includes maternity, paternity, shared parental, and adoption leave. Legislation entitles qualifying employees to statutory payments during a period of sick leave. This also applies when taking ‘family friendly leave’ such as maternity, paternity and adoption leave. These rates are subject to review each year and the government intend to implement these increases on 5 April 2020.

Statutory sick pay is set to increase one day later, on 6 April 2020, in line with the first Monday of the new tax year. From this date onwards, employees who are off sick from work for four days or more will be entitled to £95.85 per week. Individuals will only qualify for these payments if their weekly earnings are equal to, or above, the lower earnings limit. Although this currently stands at £118 per week, it’s expected that a new lower earnings limit will be announced.

What do I need to do?

In the lead up to April, you should work with your payroll department to ensure the new hourly rates are reflected in staff salaries. Begin from the relevant pay reference period. You should also review their existing policies on statutory leave and ensure these are up to date.

If you offer the statutory minimum pay for these periods of leave you should be familiar with the process. It’s important that payroll departments are aware of the need to abide by these increased rates. After all, failing to pay staff correctly runs the risk of costly tribunal proceedings and significant reputational damage.

Get support

Meeting national minimum wage requirements may seem simple on the surface. However, it’s easier than you think to pay below the legal minimum. Make sure you’re compliant in good time by speaking one of our experts today on 01455 858 132.