Changes to minimum wages in 2021
Posted on 29th January 2021
The government sets the minimum amount employees must be paid on average for the hours they work. This is called the National Minimum Wage (NMW) or the National Living Wage (NLW) for employees aged 23 or over from April this year. The rate increases each year on 1 April.
NLW and NMW changes for 2021
This year the age of employees eligible for the NMW will go down to 23 from the current age of 25 and the rates will increase by 2.2% to £8.91 per hour. Employees between 23 and 24 years old will receive an increase of almost 9%.
In November last year the Chancellor accepted the Low Pay Commission’s recommendations and announced that the full NMW rate, which will only apply for employees aged 21 to 22, will also increase by 2.0% to £8.36.
For 18 to 20-year-olds, the increase will be from £6.45 to £6.56 per hour and for 16 to 17-year-olds, the rise will be from £4.55 to £4.62 per hour. Apprentices will receive an increase of 3.6% from £4.15 to £4.30 per hour.
In the 2020 budget, the government set a new target for the NLW to reach 66.7% of median earnings by 2024, compared with 60% today.
At a glance - national living wage rates for 2021/22
The rates change every April. Here are the NLW and NMW rates for 2021/22.
|
|
Rate from April 2020 |
Rate from April 2021 |
Increase |
|
Aged 25 and above |
£8.72* |
£8.91* |
2.2% |
|
23 to 24-year-olds |
£8.20 |
£8.91* |
8.7% |
|
21 to 22-year-olds |
£8.20 |
£8.36 |
2.0% |
|
18 to 20-year-olds |
£6.45 |
£6.56 |
1.7% |
|
16 to 17-year-olds |
£4.55 |
£4.62 |
1.5% |
|
Apprentice rate |
£4.15 |
£4.30 |
3.6% |
|
Accommodation offset |
£8.20 |
£8.36 |
2.0% |
Source: Low Pay Commission recommendations. * National living wage.
Who receives the NLW and NMW
These rates apply to people who are:
part-time
casual labourers, for example someone hired for one day at a time
agency workers
workers and homeworkers paid by the number of items they make
apprentices
trainees and workers on probation
disabled workers
agricultural workers
foreign workers
seafarers
offshore workers.
Apprentices
The apprentice rate applies for people who are either:
aged under 19
aged 19 or over and in the first year of an apprenticeship.
For example, an apprentice aged 22 in the first year of their apprenticeship will be entitled to a minimum hourly rate of £4.30. If they have completed the first year of their apprenticeship, they will be entitled to a minimum hourly rate of £8.36.
Who doesn’t receive the NLW or NMW
Your employment status and other categories of work might mean that you don’t qualify for the NLW or NMW. This affects:
self-employed people running their own business
company directors
volunteers or voluntary workers
workers on a government employment programme
members of the armed forces
family members of an employer who live in the employer’s home
non-family members living in the employer’s home who share in work and leisure activities, are treated as one of the family and are not charged for meals or accommodation, such as au pairs, for example
workers younger than school leaving age (usually 16)
students in higher and further education, in work experience or a work placement for up to one year
people shadowing others at work
people on government pre-apprenticeship schemes
people working on a Jobcentre Plus Work trial for up to six weeks
share fishermen
prisoners
people living and working in a religious community.
You can use the government’s minimum wage calculator to check entitlements.
Tagged as: national living wage, national minimum wage
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