New rates for the hourly national living wage have been announced, and will come into effect on the 1st April 2020.
- For over 25’s the hourly rate will increase from £8.21 to £8.72, an increase of 6.2%.
- The minimum wage rates for under 25s will also rise with 21 – 24 year olds receiving a 6.5% rise, to £8.20 an hour.
- Apprentices will receive a minimum of £4.15 an hour.
Sajid Javid, Chancellor of the Exchequer has said ‘This latest rise will mean that since we introduced the national living wage in 2016, the lowest paid have had a wage increase of more than £3,600. We want to do more to level up and tackle the cost of living which is why the national living wage will increase further to £10.50 by 2024 on current forecasts.’
From a business perspective, these additional costs will need to be absorbed, or passed to customers, during 2020/21.
The Federation of Small Businesses has called for the Government to reduce the impact to businesses by increasing the employment allowance, saying that this is ‘critical’.
What do you need to do?
- Take the new national living wage rates into account for your payroll from 1st April 2020.
- Factor the increase into your budgets from 1st April 2020.
- Decide whether to pass the increase, or a proportion of it, to your customers as increased prices.
If you’re unsure about your pricing calculation, or the potential benefits from reviewing them, please get in touch. Many businesses avoid implementing a price increase, but don’t take in to account the less obvious benefits of doing so, which can be significant.