Are your HR and payroll systems ready for the change to NLW for 23 and 24 year olds?

26 February 2021

From 1 April 2021, National Minimum Wage (NMW) rates will increase and the age of eligibility for the National Living Wage (NLW) will reduce from 25 to 23. This means workers aged 23 and 24 are in line for a pay rise of nearly nine per cent from 1 April 2021. 

The new rates and age banding for NLW will apply to pay reference periods which start on or after 1 April 2021. If your pay reference period starts beforehand, there is no need to introduce the changes until the following pay reference period. Employers who have flexibly furloughed workers should also ensure that any time spent working or training is calculated using the new rates and age banding. 

Employers must therefore ensure they have updated their HR and payroll systems to account for the changes, and that they have the capability to reduce the age banding for the NLW to 23 and over. If they don’t, they could be liable to financial penalties and reputational harm. 

If you need any support with NMW compliance or updating your payroll system to address NMW rate rises, please contact Charlie Barnes or Simon Balaam

New National Minimum Wage rates from 1 April 2021

Age  1 April 2020 - 31 March 2021 1 April 2021 - 31 March 2022
25 and over £8.72 £8.91
23 - 24 £8.20 £8.91
21 - 22 £8.20 £8.36
18 - 20 £6.45 £6.56
16 - 17 £4.55 £4.62
Apprentice £4.15 £4.30
Accommodation allowance £8.20 p/day  £8.36 p/day