What better way to ease yourself into the New Year than with our Employment Team’s three-part bite-size summary of the changes HR professionals can expect to see in the coming months.

In this, Part 1, we explore the anticipated increase in wages and set out how employers can prepare for these changes.

National Minimum Wage

In April 2023 we will see the usual increases in National Minimum Wage rates. Those aged 23 and over will be entitled to £10.42 per hour (previously £9.50), with those aged between 21 and 22 entitled to £10.18 per hour (previously £9.18 per hour). Young workers and apprentice rates are also rising. Please visit https://www.gov.uk/government/news/large-minimum-wage-increases-help-protect-low-paid-workers-living-standards.

The rate for statutory maternity, paternity, adoption, shared parental and parental bereavement leave will rise to £172.48 per week (previously £156.66) and statutory sick pay will increase to £109.40.

The increases were recommended by the low pay commission, in response to the real-term pay cut experienced by so many as a result of higher-than-expected inflation, supply-chain issues and the energy crisis. The chosen rates are aiming to achieve as high a rate as possible without damaging employment.

Tips and gratuities

The government has also backed a private members’ bill introduced in July 2022 designed to ensure that all tips, gratuities and service charges are allocated to workers and not absorbed by their employing company. This bill will be given further consideration this month and, if it receives Royal Assent, will come into force one year later.

How to prepare?

  • Review your hourly rates and working hours. For workers who are paid a gross annual salary which is either at or just above, the national minimum/living wage, adjust wages or hours as necessary or to ensure ongoing compliance.
  • If the tips and gratuities bill is approved, and employers become legally obliged to pass on tips to workers, this means the tips will be classified as “earnings” and will be taxable. It is also highly likely that they will form part of workers’ “normal remuneration” and will need to be taken into account when calculating holiday entitlement. Employers should start to consider what additional systems they might need to put in place to ensure that this can be effectively and accurately administered.
  • For more information on any of the above issues, please contact Prettys’ Employment Team on 01473 232121 or by clicking on our contact us link.