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If you require further guidance to ensure your business is compliant with the new changes, please contact our employment or hospitality and leisure team at Myerson who can assist you.
As of 1 April 2024, the rates of NMW and NLW have increased in accordance with the Low Pay Commission’s recommendations.
Notably, the NLW will apply to a lower age group of those aged 21 and over.
The right to receive NMW and NLW applies to most workers (with some exceptions).
The increase does not merely affect the financial position of employees’ but often creates a ripple affect across the businesses in the Hospitality and Leisure sector who employ staff mainly on a national minimum wage pay basis.
Our employment blog aims to discuss the impact of the national minimum wage increases in the hospitality and leisure sector.
Understanding the new rates
The new national minimum wage rates that employers will need to comply with from 1 April 2024 are as follows:
April 2024 |
21 and over |
18-20 |
Under 18 |
Apprentice |
|
|
£11.44 |
£8.60 |
£6.40 |
£6.40 |
||
Current rates for 2023 |
23 and over |
21 to 22 |
£7.49 |
£5.28 |
£5.28 |
|
£10.42 |
£10.18 |
||||
The impact
Those in the hospitality and leisure sector often rely heavily on a workforce that includes entry-level employees, part-time workers, students, and interns.
Accordingly, changes to minimum wage rates often have a considerable impact on operational processes, such as:
1. Financial strains
Many businesses within the hospitality and leisure sector operate on tight profit margins. An increase in minimum wage rates directly translates to higher labour costs, which can strain the finances, especially for small and medium-sized businesses.
2. Re-evaluation of pricing strategies
Hospitality and leisure outfits may need to consider reassessing their pricing strategies as a direct result of the increased costs on staff. This could involve adjusting membership fees, service charges, or product prices. However, implementing price increases must be approached cautiously to prevent business loss, especially in the current financial climate.
3. Increased morale and productivity
That being said, a positive impact linked to the increase is that higher minimum wages can contribute to improved employee morale and productivity within the workforce. When workers feel adequately compensated for their efforts, they are more likely to remain loyal to their employers, deliver better customer service, and contribute positively to the overall workplace environment.
Impact for H&L businesses
The new rates reflect the biggest cash increase to date for those 21 years old and over and are to aid the higher costs of living that households have faced over recent months.
Albeit a positive step forward, it is an additional cost that employers have to delicately balance in the H&L industry when factoring the increased expenditure into their business forecasts.
The Low Pay Commission estimates that 46% of employees working in the hospitality and retail sector are paid the national minimum wage; considering such a high percentage, it will come as no surprise that hospitality and leisure businesses that have to absorb such an increase may struggle or have to invent unique ways to deal with such increase and the knock-on effect in already an unprecedented challenging market.
How Myerson's H&L team can help
Employers should have already prepared for the increase in minimum wage rates by reviewing current pay packages and keeping adequate records of payment (kept for at least 6 years) to show compliance.
Employers have a duty to resolve any backdated non-payment of wages even if the individual no longer works for the business, so any underpayments identified should be resolved as soon as possible and recorded.
Calculating NMW and NLW is a tricky area of law.