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National Living Wage to hit £11: what HR needs to do now

Chancellor Jeremy Hunt promised a minimum rate of £11 per hour from April

A new National Living Wage of £11 per hour is to be launched in April 2024, giving HR and payroll professionals a number of tasks to complete before the new financial year.

Announcing the policy at the Conservative Party conference, chancellor Jeremy Hunt said the pay rise would be of significant benefit to more than 2 million low earners in the UK.

He told delegates the uplift to at least £11 would "make sure work continues to pay.”

Read more: visit the Cost of living Learning Hub

April’s pay rise will mean every worker above 23 years of age will earn 58p more per hour. For workers on 38 hours a week, that equates to, on average, £1,146 more each year.

HR’s first priority will be to square away changes, such as the expected rate changes for under-23s and apprentices, with its payroll systems.

It will also need to conduct an audit to find exactly who will be affected by the changes, according to Claire Williams, chief people officer at HR software provider Ciphr.

She advised HR to pay close attention to the new rates’ interaction with benefits such as salary sacrifice or exchange pension schemes, which could quickly become complicated.

Speaking to HR magazine, she said: “Don’t forget to keep your finance or accounts teams updated.

“Importantly, keep employees who are getting the wage increase fully informed, preferably in writing – and keep detailed records of all changes made. This will be vital in case of any disputes, or if you need to demonstrate payroll compliance to a regulatory body.”

Fran Williams, senior product director at HR and payroll provider Iris Software Group, argued awareness and communication are key. 

Speaking to HR magazine, he said: "It shouldn’t be a surprise on anyone’s pay slip when it arrives.

"HR leaders should use resources such as the .gov website, HMRC bulletins and briefings from the industry bodies such as the Chartered Institute of Payroll Professionals (CIPP) to stay ahead of legislation."

While the proposed rise would be welcome news for employees, many in full-time work will continue to struggle with the cost of living crisis, Ciphr's Williams warned. 

She said: “There are also still big discrepancies in pay based on age.

“It’s incredibly important to recognise the part that we, as employers, can play in supporting employees’ financial wellbeing and reducing poverty, which is why at Ciphr we have committed to paying the Real Living Wage.”

The Real Living Wage is a voluntary rate of basic pay set by charity The Living Wage Foundation, which will announce its 2023-24 rates on 24 October.

The current rate of pay, set in April 2023, sits at £10.90 hourly, or £11.95 in London.