The national living wage will increase to £9.50 an hour from 1 April 2022.
The rate, which applies to workers aged 23 and over, will increase by 59p per hour from the current rate of £8.91.This is a 6.6% increase in the NLW, more than the current 6.2% CPI rate of inflation.
It will mean that the lowest-paid workers will see their annual income rise by £1,000, it has been estimated.
The minimum wage rates for younger workers will also rise. The national minimum wage will rise from £8.36 an hour to £9.18 an hour for those aged 21 to 22; from £6.56 to £6.83 for those aged 18 to 20; from £4.62 to £4.81 for under 18s; and from £4.30 to £4.81 an hour for apprentices.
The Treasury said: “By introducing these changes, which are broadly consistent with previous increases, the government accepts all recommendations made by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.
“The government remains committed to meeting its ambitious target of a national living wage of two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, provided economic conditions allow.”
Chancellor Rishi Sunak said: “This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this parliament.”
He confirmed the increase in his Budget last October.
Joanne Frew, UK head of employment law at DWF said: “This timely annual increase will be welcomed by many as the UK faces the challenges of a cost of living crisis.
“Recognising that young workers have been severely impacted by the pandemic, the hike in minimum wage represents a clear step in the right direction. However, many would argue that the increases do not go far enough, to counter soaring inflation and the increased cost of living.
“As the lowest paid workers are struggling to manage, employers will be under increased scrutiny with regard to NMW compliance. Due to the highly complex nature of NMW calculations, many high profile employers have previously inadvertently fallen foul of the legislation, resulting in substantial penalties and reputational damage. Where workers are paid the NMW, or near to the NMW, employers should consider undertaking a NMW audit in order to minimise risk.”
This article was updated on 31 March 2022. It was originally published on 25 October 2021.