National Minimum Wage Increases: What Employers Need to Know

As we step into the new financial year, April brings a series of significant changes to employment regulations, particularly concerning the National Minimum Wage (NMW) and National Living Wage (NLW). With the cost of living continuing to rise, these updates will have far-reaching implications for businesses and employees alike. Here’s what you need to know to stay compliant and prepared.

New Minimum Wage Rates from 1 April 2025

The government has confirmed the following increases, with a notable rise in the 18-20 age bracket as part of a long-term strategy to align pay scales with those aged 21 and over:

Age                                     Band Rate from 1 April 2025      Previous Rate (2024)      % Increase

National Living Wage (21+)         £12.21                                       £11.44                              6.70%

18-20                                                £10.00                                      £8.60                             16.03%

16-17                                                 £7.55                                        £6.40                             18.00%

Apprentices (under 19 or first-   £7.55                                       £6.40                             18.00%
year apprentices aged 19+)

Employers must ensure they are adjusting wages accordingly, keeping track of employee birthdays and apprenticeship milestones to avoid non-compliance. The government has previously ‘named and shamed’ businesses that failed to make appropriate pay increases, with a significant portion of cases due to oversight in wage adjustments.

Key Considerations for Employers

1. Pay Reference Periods Matter – Wage increases take effect from 1st April 2025.

2. Set Up Payroll Reminders – To avoid accidental underpayment, businesses should establish clear payroll processes and automated reminders for wage updates.

3. Communicate with Employees – Providing clear information to employees about when they will see pay adjustments can help prevent misunderstandings and disputes.

Family-Friendly and Statutory Payments

From 6 April 2025, family-related statutory payments will increase:

• Maternity, paternity, adoption, shared parental, and parental bereavement pay will rise to £187.18 per week (from £184.03).
• Neonatal care pay is introduced, offering financial support to parents of premature or sick babies.

Statutory Sick Pay and Lower Earnings Limit Updates

• Statutory Sick Pay (SSP) increases from £116.75 to £118.75 per week.
• The Lower Earnings Limit (LEL) – the minimum earnings required to qualify for certain benefits—rises from £123 to £125 per week.

Changes to Employer National Insurance Contributions (NICs)

A major financial shift for businesses is the increase in Employer NICs:

• NICs rise from 13.8% to 15% from 6 April 2025.
• The threshold at which businesses must start paying Employer NICs reduces from £9,100 to £5,000.
• This change is projected to generate £25bn for the Treasury, increasing business costs by approximately £800 per employee.

To help small businesses mitigate this impact:

• Employment Allowance will increase from £5,000 to £10,500.
• The £100,000 eligibility cap for this allowance will be removed, expanding access to more businesses.

Preparing for the Changes

With multiple updates coming into effect on different dates, employers must be proactive:

• Review payroll systems to ensure compliance with wage and NICs changes.
• Communicate openly with employees to manage expectations regarding pay adjustments.
• Assess financial impact of increased employer NICs and consider adjustments to hiring or budgeting strategies.

Staying ahead of these changes ensures compliance and helps maintain employee trust and business stability in an evolving economic landscape.

For advice or guidance please contact our Payroll Manager: linda@riverviewportfolio.co.uk