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Why is the age eligibility for the National Living Wage decreasing and where will it end up?

young waitress
21 year olds today are 37% better off than 2 years ago, hospitality employers will bear the brunt in particular.

Why is the age eligibility for the National Living Wage decreasing and where will it end up?

The NLW, increased from 1st April to £11.44 per hour, used to apply to workers aged 25 and over. Over the last few years it has reduced to 23 and over, and from April 2024, 21 and over.

The Low Pay Commission (LPC), the body that advise government on the national minimum and living wage levels, are encouraging the government to reduce the age eligibility for the top rate to 18 years, and employers should expect that, either as a single move from April 25, or in stages over the next 2 or 3 years.

Employers with a younger workforce will undoubtedly be feeling the pinch, and the sectors most effected will once again be those most squeezed by cost pressures – hospitality and care being obvious examples, as these tend to attract younger and, in the case if hospitality, seasonal workers.

37% pay increase for 21 year old workers 2022 Vs 2024

As a result of the increases a 21 year old minimum wage worker is 37% better off now than they would have been just 2 years ago, when the minimum wage before April 2022 was just £8.36 per hour for 21 year olds.

Does a 21 year old waiter contribute less than a 23 year old?  No, clearly not and hence the LPC’s position on lowering the top rate as the current age scale is

Will the same upwards pressure apply to apprentice rates?

The LPC are less inclined to pressure government to increase apprentice rates by a similar level for fear of disincentivising employers from offering training opportunities, so while it’s likely the top rate Living Wage will reduce further, ultimately to 18 years olds, we don’t expect to see corresponding increases in the apprentice rates.

For a full breakdown of this year’s minimum and living wage rates, see our earlier article by clicking here

What are the most common reasons for employers accidentally underpaying minimum wage levels? Our earlier article reveals the most common mistakes from 524 HMRC investigations, click here for the article.

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