What does the minimum wage increase mean for payroll?

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Increased rates of pay

The national minimum wage is set to increase roughly 3% this year following a lengthy review period by the government. These changes will need to be acknowledged by everyone who works in payroll.

In February, the Low Pay Commission published a set of recommendations, called the Annual Report Executive Summary, to the government concerning the national minimum wage.

Now in March, the government has responded to this report and it has accepted the recommendations contained within. The national minimum wage is set to increase above inflation for the first time in six years. These wage boosts will effect over a million workers in the United Kingdom.

What do the changes mean?

To those employed in payroll the changes mean that your work process and your knowledge both need to be refreshed. This is particularly important for companies which employ young workers and apprentices, and places with where the workforce is generally on the minimum wage as the changes will directly affect your work.

Thankfully, there is plenty of time to prepare for the increase in minimum wage, which is set to go up this October. Any office with a payroll team can prepare for the changes in just a few easy steps.

First they should learn all the relevant information and read all the changes in policy. But aside from reading the reports, the key information you need to know relates to the increase in each hourly rate for the national minimum wage:

  • For Workers aged 16 – 17 – £3.72 will increase to £3.79
  • For Youth Development (Workers aged 18 – 20) – £5.03 will increase to £5.13
  • For Apprentices – £2.68 will increase to £2.73
  • For Adults – £6.31 will increase to £6.50
  • For Accommodation Offset – £4.91 will increase to £5.08

In order to keep you work process up to date, new documents for the company should be drawn up where needed and any document containing out of date information should be retired. It is also important to understand individual needs of your staff. While some staff may only need a short meeting to update them on the changes, others could require a full day of training.

An organised team will have prepared for this event by September at the latest. In the five months between now and then, it makes sense for payroll staff to prepare for the changes. This way they will not come as an unwelcome surprise six months down the line.

How we help

As jobs in payroll cover a broad and specialist area many employers are not fully aware of the knowledge these positions require. Contact us on 020 7247 9455 if you have questions about payroll or any payroll positions you want to fill. We can assist you every step of the way – from writing the job advertisement to pre-screening candidates. Our consultants help the UK's top payroll talent find their next dream job. Ideal when your role or vacancy requires only the best.