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An increase to the National Living Wage- Act now


Increase to the National Minimum Wage and the National Living Wage

Following the recent budget announcement on 27th October 2021, the government confirmed the National Living Wage and the National Minimum Wage will increase in April 2022.


But what are the real costs?


The budget announcement revealed a 6.6% increase to the National Living Wage for 23 year olds and above from £8.91 to £9.50. A welcomed increase for the employee, but for smaller businesses who are still recovering from the COVID blow, this rise could be a make or break. In effect, the increase could mean an additional £1000 salary a year for each employee in a full time role. The rise in salary may also discourage employers from recruiting additional staff when required, potentially causing current employees’ workload to be stretched.

The increase in the National Living Wage also has an impact on pension contributions: employers are legally required to pay at least 3% of their employees’ salary into their pension schemes.

National insurance was another area of interest for businesses in the budget, as the chancellor revealed an increase of 1.25% rising to 15.3% for employers. For an employee working 40 hours a week on minimum wage, the increase to the employer will be: £9.50 X 40 Hours = £380.00 minus £170.00 Lower earning level deduction = £210 x 15.05% = an employer NI contribution of £31.60, an increase of £2.62 per week per employee.

With these increases in mind, it may be worth considering what can be done to future proof your business: one area which may prove fruitful is a possible restructure.


Review and Restructure

It’s time to be totally honest.

Within your workforce, are there individuals who are constantly underperforming? Is this factor overlooked because they are a nice person? Their performance levels are likely to negatively impact on those employees having to compensate which can have a negative impact on their performance and attendance.

Or, do you have any employees who have been on long-term sick for a disproportionate amount of time? If you have been unable to agree a return to work date despite making reasonable adjustments then it may be time to consider a capability dismissal. If this is a route that you decide to pursue, please be mindful that if you serve notice, it can range from one to 12 weeks, depending on their length of service.

NOW is the time to act so that you are prepared for April- HR: 4UK can help you with a restructure, performance reviews, capability dismissal and payroll.


Positive implications for SMEs

The Kick-start scheme is an initiative which allows businesses to provide government funded jobs to 16-24 year olds currently in receipt of Universal Credit. It is a fantastic opportunity for employers to extend their workforce with a completely free resource. Although the scheme has been extended by three months to March 2022, the cut off for applications is the 17th December, so don’t miss the boat- submit your application now to avoid disappointment!

For more information on the kick-start scheme click here.


Extension of Youth Offer to 2025

The Youth Offer, which provides information advice and support to young people aged 16-25 year olds on key areas including education and employment, has been extended to 2025. The Government plan to invest more than £60 million over the next three years, and the scheme intends to help 16-24 gain new skills, build their confidence and find lasting employment.



From 11th January 2022, employers will be able to apply for a payment of £3,000 for apprentices with an employment start date from 1st October 2021 to 31st January 2022. Applications close on 15th May 2022.

What you can use the payment for

The payment is different to apprenticeship levy funds: you can spend it on anything to support your organisation’s costs and it doesn’t have to be paid back! For example, you could use it to pay for uniforms, your apprentice’s travel or their salary.

The payment is in addition to the existing £1,000 an employer will already receive for taking on an apprentice who is either:

  • Aged 16 to 18 years old
  • Under 25 and has an education, health and care plan or has been in the care of their local authority

Full details can be found by visiting the GOV.UK website.


Business Rate Cuts

Within the Budget speech, Rishi Sunak also announced that within the 2022-23 tax year, businesses within the hospitality and leisure sector would be able to claim a discount on their business rates of 50%, up to a maximum of £110,000: a tax cut worth almost £1.7bn.

In conjunction with the existing Small Business Rates Relief, the chancellor said the move meant more than 90% of all retail, hospitality and leisure businesses would see a discount of at least 50%.

Business rates within retail and leisure sectors have already been reduced during the present financial year following the rates holiday during the pandemic.

Hopefully this will drive an increase in footfall in these sectors which in turn will increase sales, positively impacting on future employment possibilities.