Pay and how it will affect Employers in April 2024

In our article we take you through 3 important pay changes that as an Employer and your HR team need to be prepared for.

Below are the 3 changes coming into force, we also have included the dates they go live.

Let’s take a look:

1. Change and increase to the national minimum wage (NMW)

There are significant increases this year, along with a change to the age limit, affecting the National Minimum Wage (NMW) and National Living Wage (NLW). See below for the increases:

Age category	Current (2023)	New (1 April 2024)	Increase £ + %
NLW – 21 years and above	£10.42	£11.44	£1.02 @ 9.8%
NMW – 18 years to 20 years	£7.49	£8.60	£1.11 @ 14.8%
NMW – 16 years to 17 years	£5.28	£6.40	£1.12 @ 21.2%
Apprentices	£5.28	£6.40	£1.12 @ 21.2%

You will note here that the NLW will apply to individuals 21+ which is a change from previous years where the NLW applied to those 23+.

All rates will be live and applicable from 1 April 2024.

As an Employer you must ensure the correct wage payments are made (these are the minimum), individuals have the right to bring a claim to tribunal if minimum payments are breached.

2. New accrual system to calculate holiday pay at 12.07% and rolled up holidays

Calculating annual leave and payments – Many will have heard of the recent case Harpur v Brazel in the Supreme Court the ruling made the calculation of holiday pay for irregular, and part-year workers more complicated and expensive for Employers. The government is overruling that decision and reinstating the principle previously and commonly used, the change will introduce new legislation permitting holiday pay and annual leave to be calculated at the hourly rate of 12.07%.

Previously, the calculation method was a reference period, it is no doubt this was/is not practical, especially when hours, days can be variable. As an Employer you will now have discretion to choose whether to calculate holiday entitlements by way of a reference period or by applying a rate of 12.07% to the workers’ earnings during any pay period.

Rolled up holiday pay has been unlawful since a European Court of Justice case ruling in 2006, and on the basis, it would discourage workers from taking their statutory holiday entitlement. Rolling up holiday pay means as an Employer you pay workers an additional sum on top of their hourly rate of pay, this is instead of the worker taking time off work.

The new change for Employers, is the introduction of new legislation giving you the Employer the option to use rolled up holiday pay. This change will be limited to workers with irregular hours or who work part of the year.

The change comes timely and will apply to Employers with holiday years starting on 1 April 2024.

3. From 6 April 2024 National Insurance contribution changes

Live as of 6 April 2024 are the following National Insurance contribution changes: 

• reduction of the main rate of Class 1 employee National Insurance contributions from 10% to 8%
• for self-employed, the rate of Class 4 National Insurance contribution is reducing from 9% to 6%, in addition the removal of payment of Class 2 contributions (those who pay voluntarily will still be able to)

Employers and payroll teams must be aware of these changes and act accordingly.

How can we help you?

As these changes loom for 2024 we want to assure you we are here to assist with the changes, we are a team of highly experienced HR Consultants who can manage and assist you in any capacity, we have the relevant skills and knowledge to support you, we can work with you on a retained basis or for any length of time, why not contact us for a confidential no obligation chat. 0333 006 9489 or email us at [email protected]

Disclaimer

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