The National Minimum Wage in the UK is the minimum amount per hour (£) businesses are legally entitled to pay their employees. The government reviews the amount yearly to adjust the figure and match the existing living standards. The National Minimum Wage and rates change for 2023 was recently announced and will take effect starting 1st April 2023.
In this article, we guide you through everything you should know about the 2023 National Minimum Wage in the UK. We also cover the National Living Wage and how it differs from the National Minimum Wage. Let's get started.
National Minimum Wage 2023 and National Living Wage 2023
Before delving deep into the details, let's start by addressing the elephant in the room. Is the National Minimum Wage higher in 2023 than the current rates?
The short answer is yes! The National Minimum Wage and Living Wage in the UK will increase starting 1st April 2023. The driving force behind the increase in wages stems from the advice offered by the Low Pay Commission (LPC), meaning a typical full-time worker should receive a minimum pay of about £150 monthly. The additional income added on top of the current rate is a significant relief to most UK employees who are feeling the pinch of the increasing cost of living crisis.
Here are the hourly rates for National Minimum Wage and National Living Wage for 2023 as presented by the UK government.
23 - and over
The Difference between the National Minimum Wage and Living Wage
National Minimum Wage refers to the minimum hourly rate that companies should offer employees under 23 years if they handle the following tasks:
Are full-time workers
Are casual workers
Are agency workers
They apprentice in some instances
On the other hand, National Living Wage Rates are the minimum hourly rates for employees aged 23 and over. In 2021, the age was reduced from 25 to 23, but estimates show it will decline further to 21 by 2024, as advised by Low Pay Commission.
2023 National Minimum Wage Entitlement
The National Minimum Wage is calculated hourly but is not limited to employees paid per hour basis. The rate applies to most workers in the UK, including offshore workers.
The 2023 rates are similar to other areas such as Wales, Northern Ireland, Scotland, and England. The rates start on the same date as the UK.
Equally important, a select group of individuals does not qualify for the minimum wage. These include unpaid volunteers, self-employed workers, members of a family cohabiting with the employer, and company directors. If you fall among these groups, you are not entitled to receive the set National Minimum Wage.
Aged over 19 years but are in the first year of their apprenticeship
Suppose an apprentice is passed the school leaving age, typically a worker aged 19 years and above, and has already completed the first year of apprenticeship. Such individuals will not receive the apprentice rate but are entitled to be paid minimum wage matching their age. For example, workers aged 20 years and still in the second year of their apprenticeship will receive £7.49 per hour from April 2023.
How to Calculate the National Minimum Wage Rates
You can find the correct minimum wage using the specific employees' working hours. To find your working hours, consider the government's definition of employee time work time. These include:
Work hours meant for working and carrying out company duties
Traveling or training as part of job roles
Business or working lunches
Working abroad for the company
Overtime or employee-requested unpaid excess hours
On-call working at the place of work
Commuting travel time unless the place of work is not fixed
Contractual working time
The government definition does not include the following:
Non-working breaks during work hours
Standard commute from home to a field workplace
Time spent on non-work-related calls
Leave such as maternity, holidays, and sick
Time spent at the workplace while not carrying out any duties
Time used on industrial action or strike
Businesses can also use the government's step-by-step guide to align their wages with the legal requirements. With the guide, it's easy to calculate the average hourly pay and the number of hours over a specified period.
The only caveat with these government tools is that they are not customized to your company's unique needs. This makes it challenging to find the correct minimum wage for your unique company's needs. Luckily, you can easily create employee schedules with Shiftbase when your business constantly deals with part-time employees and flexible working time. The tool is designed for seamless employee scheduling and time registration to develop a flexible schedule for a more extended period and track your employees' work hours.
2023 London Living Wage and Real Living Wage
This is another key benchmark and arguably the most interesting for UK employers. TheLiving Wage Foundation is responsible for deciding the real Living Wage voluntarily. They believe all UK staff aged 18 and over should receive payments that can cover everyday living costs without strain. For this reason, they calculate the Living Wage on a basket of several household services and goods, usually resulting in a higher amount than the living and minimum wage.
The scheme currently has over 11,000 UK companies, with a few big fishes like Google and Nationwide. The rates they offer have increased wages for over 300,000 workers.
The real Living Wage will also increase in the coming years to align with the other wage rate increases. Estimates show it will increase by 10.1% in 2023 to reach £10.90/hour in the UK and £11.95/hour for London Living Wage in 2023.
The Importance of Paying Real Living Wage
Although companies are not legally entitled to increase their employee wages to meet the real Living Wage, it can benefit your company in various ways.
In fact, the most common advantage is that it enhances the employer's profile to attract and retain top talent. According to a survey by CareerWallet, most workers in the UK (25%) have not yet thought of changing roles or demanding a raise due to the rising cost of living. Employers can use this opportunity to increase employee salaries and offer competitive rates to satisfy them amidst the high cost of living. A generous pay package will impact the employees' productivity and reduce turnover rates.
Increasing the pay rates to match the real Living Wage doesn't hurt employers either. It enhances your brand reputation to boost customer loyalty and enable you to stand out to prospects.
The Impact of Minimum Wage on Human Resources
Minimum wage rates are crucial to attracting and retaining top talent. An increasing number of UK companies are paying the Real Living Wage for better competition and attracting the best candidates.
Building a good team requires companies to pay more than the minimum wage set by the government to ensure employees can survive and adapt to the high cost of living. Investing in your staff enhances their growth, and the positive changes they bring will expand your business to rise above competitors and be more productive.
Develop Seamless Employee Schedules with Shiftbase
Effective employee scheduling is an essential business operation when it comes to the accurate paying of employees. Although it has a huge impact on business longevity and success, it is usually challenging to have proper employee schedules, especially during the era of flexible work hours and unique pay period.
Offering an accurate work schedule lets workers plan their personal life and the number of hours they spend at work. Workforce management will benefit significantly from proper employee schedules by enhancing employee satisfaction and retaining top talent.
Calculating accurate rates for your employees also depends on how your employee schedules are. Perfect work scheduling reduces the mistakes and errors that come with manual scheduling. Most UK companies invest in scheduling software tools like Shiftbase to automate scheduling. It is a great tool regardless of the business size.
Work schedules are the designated days and hours employees should perform their duties and receive compensation. However, the type of employee work schedules varies from one company to another. It is usually up to the management and HR to decide on the best fit for the business and what the employees want.
Depending on the work schedule you have in your company, the business must pay different labor costs and offer benefits. As aforementioned, you will pay the Minimum Wage and Living Wage depending on the years and hours the employee work. The common work schedules for most workers in the UK are full-time, part-time, shift workers, and freelancers.
Developing work schedules for each specific group is essential to ensure you calculate hours accurately and pay accordingly. Investing in reliable scheduling software will enhance the profitability and longevity of the company. Shiftbase offers reliable employee scheduling and logging hours to save you a ton of time when it comes to scheduling.
The solution is effortless to use owing to its user-friendly interface. The fully customizable settings are managed by employers and integrate with over 30 favorite business tools, including seamless access to payment records. Begin your free trial today to learn how to satisfy your staff with successful management.