PRESS RELEASE : Autumn Statement – PwC comments on new National Living Wage and National Minimum Wage rates [November 2022]

The press release issued by PWC on 17 November 2022.

John Harding, leader of PwC’s Employment practice, says:

“Following recommendations by the Low Pay Commission, the Chancellor’s announcement that the National Living Wage (NLW) will increase by 9.7% and the National Minimum Wage (NMW) will increase by similar levels from 1 April 2023, will be welcomed by the 2 million employees who are expected to benefit.

“A full time worker aged 23 or older currently on the NLW will see the biggest ever increase to £10.42 per hour. These increases mean that the Government is on track to meet its commitment to have a NMW equal to two-thirds of median earnings (for workers aged 21 and over) by 2024.

“This commitment supports the Government’s ambition to create a high productivity, high wage economy and a fairer society. But an employer with 200 employees paying at the National Living Wage will now face an increase of over £500,000 in their employment costs as a result. So while the proposed increases look good for employees, they will create challenges for many employers in industries such as retail and hospitality who traditionally employ large numbers of workers close to the NLW. In addition employers that also pay above the NMW levels are likely to be impacted as employees look to retain the differentials.

“Finally, the rules governing the calculation of NLW and NMW are complex and have been subject to significant changes in April 2020. Given this increase and how many employers will now have employees caught by the NMW regulations, they should be taking the time now to understand what impact these changes will have on their current operations as well as their future employment models to ensure they are not breaching the rules inadvertently. The financial and reputational implications of a NLW or NMW breach are significant and include penalties of up to 200% and being publicly named as a non compliant employer by the Government.”