As the cost of living continues to rise, an increase to the national minimum wage will be a welcome boost for workers on an hourly rate. Chancellor of the Exchequer, Rishi Sunak announced the increase in October 2021, during the autumn budget and the new rate came into effect on April 1st 2022 for employees 23 and older. A sign of the times, perhaps, the new rates represent the third highest annual increase since the global recession in 2008.
For payroll service providers, it’s time to update your algorithms and relevant data points with the new figures. If you’re still managing your payroll processes on manual spreadsheets, you may want to consider an audit (link to Qualitas landing page) of your systems and processes from a third-party payroll provider.
What is the new minimum wage rate from April 2022?
The new minimum wage rate for over those 23 and older is £9.50 per hour, increasing from £8.91 in the previous tax year for FY2021/22. Representing a 6.6% hourly rate increase, this just about keeps pace with inflation. The Office of National Statistics (ONS) Consumer Prices Index (CPI) rose by 6.2% in the 12 months to February 2022.
Last year, the Government dropped the qualifying age for standard rate minimum wage from 25 years old and older, to 23 years old and older. The qualifying age did not change for FY2022/23.
What are the national minimum wage rates for other age groups?
For those in other age groups, the new hourly national minimum wage rates are:
- 21 -22-year-olds: should receive a minimum of £9.18 per hour. The current rate is £8.36 per hour
- 18 – 20-year-olds: should receive a minimum of £6.83 per hour. The current rate is £6.56 per hour
- Under 18s: should receive a minimum of £4.81 per hour. The current rate is £4.62 per hour
- Apprentices: should receive a minimum of £4.81 per hour. The current rate is £4.30 per hour.
Please note that the new minimum wage for apprentices applies to workers who are 19 years old or younger, or if they are in year 1 of their apprenticeship.
Summary of the new national minimum wage rates for all age groups
|Age Bracket||Rate||Applicable from|
|23 years old and over||£9.50|| |
April 1 2022
|21-22 years old||£9.18|
|18-20 years old||£6.83|
|for under 18s||£4.81|
Do all workers qualify for the national minimum wage?
There are some clear exemptions to receipt of national minimum wage. These include:
- Self-employed workers
- Company Directors
- Students who are on work placements
- Employees who are younger than school leaving age
The following workers do qualify for the correct national minumum wage rate:
Workers are also entitled to the correct minimum wage if they’re:
- part-time staff members
- casual labourers, for example someone hired for one day
- agency workers
- workers and homeworkers paid by the number of items they make
- trainees, workers on probation
- disabled workers
- agricultural workers
- foreign workers
- offshore workers
Payroll providers should seek further clarity from HMRC if they are unsure of an employees’ status and eligibility for the new minimum wage rates.
Outsourced payroll services
Alternatively, it may be time to automate and outsource payroll services to a to a third party specialist, who manages all of these changes for you.
If you’d like to get a free no-obligation quote today, get in touch now and we’d be happy to build a bespoke package around your specific requirements and get you started on a transformational outsourced payroll service today.