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National Minimum Wage Increase April 2023

The National Minimum Wage and National Living Wage increased in April 2023 as a result of recommendations made by the Low Pay Commission – an independent body made up of employers, trade unions and other experts. Statutory sick pay, maternity, adoption, paternity and shared parental pay rates also increased in April 2023, along with increases to tribunal limits. 

As a leading recruitment and service provider, it’s important for us to make our clients aware of any important industry changes. Below is a summary outline of what the 2023 statutory pay increases are.

What is the new National Minimum Wage (NMW)
and National Living Wage (NLW)?

The NMW applies to those between school leaving age and 22 years, and the NLW applies to those aged 23 or above. The new statutory rates for 2023 will come into effect from 1 April 2023, and are as follows:

 

Rate from April 2023

Increase from 2022 (£)

Increase from 2022 (per cent)

Ages 23 and over (NLW)

£10.42

0.92

9.7

Ages 21-22

£10.18

1.00

10.9

Ages 18-20

£7.49

0.66

9.7

Ages 16-17

£5.28

0.47

9.7

Apprentices*

£5.28

0.47

9.7

*There are different rates of pay for apprentices depending on the individual’s age and what year of their apprenticeship they’re in. The rate mentioned in the above table applies to apprentices that are either aged under 19, or aged 19 or over and in their first year of their apprenticeship.

New statutory sick pay rate

Statutory sick pay (SSP) will rise on 2 April 2023 from £99.35 to £109.40 a week. Workers can claim SSP if they meet the eligibility criteria, and it can be claimed up to 28 weeks. It is paid for the days an employee normally works – also called ‘qualifying days’.

You can use the government’s SSP calculator to work out your employees’ statutory sick pay. You could also offer your employees more than the statutory rate if you have a company sick pay scheme, but you cannot offer less.

Statutory maternity, paternity, adoption and shared parental pay increases

Statutory maternity, paternity, adoption and shared parental pay rates will rise from £156.66 to £172.48 a week on 2 April 2023.

  • Statutory maternity pay (SMP) for eligible employees can be paid for up to 39 weeks, where tax and national insurance still need to be deducted. There are different rules for casual (or short contract) employees and agency workers.
  • Employees may be eligible for statutory paternity pay if they and their partner are having a baby, adopting a child or having a baby through surrogacy.
  • When an employee takes time off to adopt a child or have a child through surrogacy, they may be eligible for statutory adoption pay.
  • Employees may be able to get statutory shared parental pay (ShPP) if they’ve had a baby or adopted a child.

You can use the UK government’s maternity, paternity and adoption calculator to work out an employee’s SMP, paternity pay or adoption pay.

Increased tribunal limits

It’s important that all employers in the UK take note of the latest update to employment tribunal limits. The Employment Rights (Increase of Limits) Order 2023 was published to include the annual increase in tribunal limits, effective 6 April 2023. Key changes include:

  • Week’s pay limit increase: The maximum amount of a ‘week’s pay’ used to calculate statutory redundancy pay and the basic award for unfair dismissals increased from £571 to £643.

  • Compensatory award limit increase: The maximum compensatory award for unfair dismissal claims increased from £93,878 to £105,707. This means that if an employee successfully claims unfair dismissal, the maximum amount that they could receive is £105,707.

Next steps

It’s important to ensure that workers’ pay rates remain in line with the new National Minimum Wage or National Living Wage, and employees are communicated to about any changes to their employment contracts. If employers do not implement these changes in time, employers would owe their workers any arrears and pay them back. If companies refuse to pay minimum wage rates, HMRC will send them a notice for any arrears along with a fine. HMRC can also take employers to court on behalf of workers for refusing to pay minimum wage rates.

We work closely with our clients each year to keep them informed of such industry changes, along with providing rate calculator tools to help discuss and confirm candidate pay rates. Among the benefits we offer to our clients, we save our clients the hassle of managing all payroll changes of temporary workers, and communicating any pay rate changes to candidates.

If you’re an existing Blue Arrow client, feel free to reach out to your Blue Arrow account manager for more details regarding statutory pay increases. If you’re new to Blue Arrow, contact us to learn more about our services.