The supermarket chain Aldi, which employs 45,000 people, is due to raise its minimum hourly rate from £12.40 to £12.71, a statement released on Tuesday (21 January) revealed. Workers in London will see pay rise from £13.65 to £14.
The move comes after Aldi’s UK CEO Giles Hurley signed an open letter to the chancellor regarding raised employer costs, including national insurance contributions (NIC).
The letter said “the scale and speed of these new costs create a cumulative burden that will inevitably lead to job losses and higher prices.”
Minimum wage will also increase from £11.44 to £12.21 in April 2025 for people who are 21 and over, from £8.60 to £10 for those between 18 and 20 and from £6.40 to £7.55 for under 18s. Meanwhile, a host of new employment reforms are on the table through the Worker’s Rights Act.
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If companies cannot afford to give employees pay rises, Samantha O'Sullivan, policy and advisory lead at the Chartered Institute of Payroll Professionals, suggested that they explore alternative means of remuneration, to ensure workers are still rewarded at work.
Speaking to HR magazine, she said: “[Employers could consider] allowing more working from home days, to save on the cost of commuting, or allowing all staff to have their birthday off without using their annual leave entitlement.
“Perhaps a one-off bonus related to company performance, so employers aren’t tied into the commitment of a formal pay rise.”
Ruth Cornish, founder of HR consultancy Amelore, told HR magazine that focusing on employees’ development and succession plans can also be a good way of rewarding employees.
“Aside from formalised training and courses, creating an environment in which development and progression is openly discussed and supported is valued. Giving everyone access to an internal coach or mentor is an example of this.
“Additionally, having open conversations with the staff you value and see future progression for can engender loyalty and commitment in the absence of a pay rise. Create a compelling career path for them.”
She also recommended a focus on each individual: “Getting to know your team and allowing them time to support things they care about like charities, hobbies or things in their community, is appreciated.”
Smaller employers may also be eligible for help from the government through the employment allowance (EA), which allows eligible employers to reduce their annual national insurance liability by up to £5,000 in the tax year 2024/2025, if their national insurance liabilities were less than £100,000 in the previous tax year.
This allowance is due to be increased in the next tax year and the £100,000 threshold is set to be removed, as announced in the Autumn Budget.
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O’Sullivan said: “We would highly recommend employers to claim the EA in 2025-26, which from the new tax year is available to more employers than ever, since the £100,000 threshold for claiming the EA has been removed.
“An added bonus to the EA is the amount that employers can claim, which has increased to £10,500 (from £5,000) in the new tax year.”
However, while non-pay related reward can be effective, employers should be careful not to use rising costs as an excuse to fall behind on pay, said Simon Jones, director of HR consultancy Ariadne Associates.
He told HR magazine: “Although this year's impact is around direct employment costs, employers face rising costs all the time. It's only been a couple of years since a massive jump in energy costs was having a major impact on business. Employers have to make these trade-offs all the time.”