In April 2021 the annual increase in national minimum wage rates will take effect, but this year there is a significant difference. Currently, at a higher rate, the National Living Wage (NLW) is applied to workers aged 25 or over, with the lower bands of the National Minimum Wage being applicable to those aged 24 and under. However from April 2021, the age threshold for the National Living Wage will be lowered to 23, resulting in a significant rate rise of 8.7% for all workers aged 23 and 24, as opposed to a raise of closer to 2% for all other workers.
The new rates applicable from April 2021 are as follows:
- Age 23 or over (NLW rate): £8.91 (up 2.2% from £8.72).
- Age 21 to 22: £8.36 (up 2% from £8.20).
- Age 18 to 20: £6.56 (up 1.7% from £6.45).
- Age 16 to 17: £4.62 (up 1.5% from £4.55).
- Apprentice rate: £4.30 (up 3.6% from £4.15).
- Accommodation offset £8.36 per week (up 2% from £8.20).
For agencies operating at lower wage levels, an increase in the national minimum wage, or the number of staff entitled to receive the same, may necessitate an increase in charges to hirers. Some contracts, including Lawspeed client terms, will allow for an automatic increase. However, in other cases negotiation may be required. A change in rate may also impact upon terms with PAYE candidates and/or Key Information documents where an actual figure is included as a minimum rate of pay, as required by the Conduct Regulations.