How will the increase in National Living Wage affect you?

How will the increase in National Living Wage affect you?

  • Date: Friday 26th November 2021
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From 1st April 2022, National Living Wage in the UK increases to £9.50 per hour for those over the age of 23. This means an increase of over £1,300 per year for a full-time employee, and obviously associated oncosts for employers.

Additionally, we have seen a dramatic uptake in the ‘Real Living Wage’, introducing a competitive advantage to those adopting the £9.90 per hour rate (£11 inside of London) in a tough recruitment market.

The ‘Real Living Wage’ of course is optional and based on focus group reports, advising employers how much a UK worker realistically must earn in order to maintain an acceptable standard of living.

However, critics say that increases reflecting almost twice the current UK inflation rate may have a devastating effect on many small and medium sized businesses, barely holding on in an environment still affected by Covid-19 and Brexit.

What to do to prepare yourself

Review your structure and efficiencies. This may not necessarily mean redundancies, but you may have to review your working practices and payment structures.

  • How much overtime do you award and are additional overtime costs in fact more pricey than additional staffing would be? (Bearing in mind you still have to award average pay over a period of 52 weeks when paying holiday)
  • Consider other roles within your business. Is there a need to award an uplift to other roles because the gap between Living Wage and someone on a skilled rate has narrowed?
  • Are you providing additional non-monetary benefits such as flexible working to build loyalties with your staff that stretch beyond the pay cheque?
  • Are you able to save on oncosts, for example by reducing travel or considering electric vehicles to avoid having to submit to rising fuel costs?
  • What is your policy on home-working and would this open options for smaller office premises?
  • When was the last time you reviewed your business insurances? We often discover that directors are over-insured because they inadvertently signed up to multiple covers.


Source: Manuela Grossmann

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