Each year, the government reviews the rates of national minimum wage and other employment related rates. This year is no different.
With effect from 1 April 2022, National Minimum Wage (NMW) will increase as follows:
Current Rate (April 2021 – March 2022)
New Rate (with effect from 1 April 2022)
23 and over
21 to 22
18 to 20
The increases to the top two rates are much higher than we have seen in previous years, being 6.6% and 9.8% respectively and narrows the gap between the two rates. Whilst the Labour Party have been pushing for the NMW to be increased further than this, this latest increase shows a step towards reaching the Government’s promise to increase the NMW to £10.50 by 2024, and for all employees over the age of 21 to be entitled to this.
While this increase is more substantial than we have been used to in previous years, the current “cost of living crisis” will significantly dampen the actual effect this change will have in real terms. With inflation already at 5.4% and fuel and utility prices expected to continue to increase, most employees who are being paid the NMW will not enjoy any advantage of this pay increase.
In addition, employee National Insurance contributions are due to increase, with the general employee contribution rate increasing from 12% to 13.25%, further limiting the effect .
With the ongoing skills shortage in many industries, employers with a large number of minimum wage employees will need to consider ways to ensure that they are attracting and retaining staff. If employers are unable to offer higher wages, other employee engagement tactics will need to be considered.
As well as the NMW increases, other employment law rates are being updated with effect from April, including:
a week’s pay for the purpose of calculating statutory redundancy pay increases from £544 to £571
statutory maternity pay, statutory paternity pay, statutory adoption pay, statutory shared parental pay and statutory parental bereavement pay increase from £151.97 to £156.66
statutory sick pay will increase from £96.35 to £99.35
the maximum compensatory award for unfair dismissal increases from £89,493 to £93,878 (or one year’s pay, if lower).
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.