13 January
By Victoria Wainwright
Categories: Government/Business/HMRC/Industry News/Taxation

Prepare for statutory pay increases

The Government has announced proposed increases to statutory payments from 1st April 2020 that include low-paid workers receiving the biggest cash increase ever with a National Living Wage (NLW) pay rise of 6.2%.

Following the recommendations of the independent Low Pay Commission, the government has announced the following proposed increases from April 2020:

National Living Wage 2020/2021
Increases from £8.21 to £8.72

National Minimum Wages 2020/2021
21 to 24 year olds
from £7.70 to £8.20 per hour
18 to 20 year olds from £6.15 to £6.45 per hour
16 to 17 year olds from £4.35 to £4.55 per hour
Apprentices from £3.90 to £4.15 per hour

Proposed amounts have now also been put forward by the Government to come into effect in April 2020 for the following:

Statutory maternity/paternity/adoption leave 
Increases from £148.68 to £151.20 per week (or 90% of weekly earnings, whichever is lowest)

Statutory sick pay 
Increases from £94.25 to £95.85 per week

The Chancellor has pledged to increase the NLW towards a new target of two-thirds of median earnings by 2024, which subject to sustained economic growth, could see the NLW rising to £10.50 per hour.   

Head of HR at Naylor Wintersgill Claire Featherstone comments, “The substantial increases to statutory payments already being seen sets the Government on the path to reaching their proposed target. The rapid rises mean that it is crucial for small-medium businesses to start to plan ahead and think about how they are going to accommodate the increased costs. Remember, it is not just the growth in salaries to consider but, as an employer, you must also bear in mind the impact this then puts on other expenses such as pension contributions and PAYE.”

Increased employment bills may contribute to constrained profitability and cash flow for small-medium businesses going forward. Therefore, as an employer it is important to start focusing now on how you will navigate the growing costs ahead.

Please do not hesitate to get in touch with a member of our team if you have any queries and concerns and we will be happy to discuss your particular circumstances.

You can also join our HR expert Claire Featherstone for an update on all the latest employment law changes ahead at our next breakfast briefing event on Thursday 13th February. Click here to book your place now.