The National Minimum Wage (NMW) was implemented in April 1999 to safeguard low-paid workers from exploitation while aiming to maintain employment levels and the broader economy’s stability. Come April 2024, the minimum wage is set to increase, prompting both end clients and recruitment companies to make necessary preparations.
NMW Overview: Initially established at £3.60 per hour for adults over 22 in April 1999, benefiting 1.2 million adults with a 10% pay rise. Contrary to concerns about its impact on employment, it boosted productivity and reduced inequality, thereby curbing in-work poverty. Effective April 2024, the rates will adjust to:
- National Living Wage: £11.44 (for those over 21, down from 23 in 2024)
- 18-20-year-old rate: £8.60
- 16-17-year-old rate: £6.40
All employers, irrespective of size, are obligated to adhere to these rates. Whether you’re an agency worker or part-time employee, you’re entitled to receive the Living Wage or NMW.
NMW and Umbrella Company Employees: Umbrella company employees share the same rights as other workers, expecting their rates to rise post-April 2023. This information should be communicated in their KIDs, with workers encouraged to ask if they didn’t receive it. Additionally, with salary hikes come increased income tax and National Insurance Contributions (NIC), impacting those claiming benefits.
NMW and Employers: While the current cost-of-living crisis affects everyone, complying with minimum wage regulations is obligatory for employers, necessitating rate adjustments by April. Non-compliance risks fines or prosecution. Employers may face challenges managing associated costs, NIC, and holiday pay, potentially leading to price adjustments, cost-cutting measures, or renegotiations with employees to reduce hours.
NMW and Recruiters: Recruiters may experience:
- – Margin impacts due to increased employer costs
- – Direct impact on profitability due to decreased hiring
Nevertheless, benefits include:
- – Enhanced recruitment with better-quality candidates
- – Improved retention and productivity
- – Enhanced employer brand
Recruiters must act promptly to negotiate appropriate rates for candidates, issue new KIDs if necessary, and explore ways to mitigate NMW impacts within their supply chains.
Contact Achieve Hospitality today at hello@achievehospitality.co.uk to find out how we can help you with your recruitment needs.
Written by Grace Jones, March 2024
