What do statutory pay rises mean for SMEs?

As sure as April brings showers, it also brings statutory pay rises. With thanks to inflation, pay rises jump higher than normal placing SMEs under considerable pressure. Be prepared with our handy summary of statutory rights to help you plan and budget for the imminent rises this April.

Here is a handy summary of the main statutory pay rates from April 2023

As sure as April brings showers, it also brings statutory pay rises.

This year, thanks to inflation, they jump higher than normal. For SMEs already under considerable pressure, this is not great news.

To help you plan and budget for the imminent rises in April, here is a handy summary of the main statutory rates.

National living/minimum wage

As you will know there are several components to the national living wage. You may not know, though, that the Low Pay Commission (who advises the government on the rates) has a target for the national living wage to be two-thirds of the median earnings for all workers aged 21 and over by 2024

This aim had been disrupted by COVID and, even before inflationary pressures hit in 2022, they had advised raising rates last year more than normal to catch up (6.6%). This year their recommendation was in the region of 10%.

This means that from 1st April 2023, the new rates are:

Aged 23 and older (the national living wage)                              £10.42 per hour
Aged 21-22         £10.18 per hour
Aged 18-20         £7.49 per hour
Aged under 18 (but above compulsory school leaving age) £5.28 per hour

 If you pay at or near the national living wage, it’s important to be aware that processes such as clocking on/off or pay deductions (like for a compulsory dress code for waiting staff) can drag the effective rate below legal minimums.

This catches a lot of businesses out and can lead to a lengthy investigation and sanctions from HMRC. We can help you review your employment practices to ensure you stay compliant.

Apprenticeship rates

There are also minimum wage rates for apprenticeships. These start significantly lower than the headline minimum wage rates. From 1st April these starting rates rise from £4.81 per hour to:

Apprentices aged under 19                        £5.28 per hour
First year apprentices aged 19 and over £5.28 per hour
Aged 19 or over and have completed their first year Applicable living/minimum wage for their age (see above)

With much of the training paid for by the government, apprenticeships are a cost-effective and interesting way to bring new talent into your team. We can help you explore this option if you get in touch.

Statutory maternity/paternity/adoption pay

It is a similar story for statutory maternity pay as well as statutory paternity, adoption and shared parental leave pay. Of course, the first six weeks of maternity and adoption pay are calculated as a percentage of average weekly earnings. This stays at 90%.

Thereafter, maternity, paternity, adoption and shared parental leave are all paid at a rate of £172.48 per week or 90% of the employee’s weekly average earnings (whichever is lower). Last year in 2022 the rate was £156.66 per week.

Statutory sick pay

Statutory sick pay is the last of the main statutory rates that we will look at here. For qualifying employees it becomes payable after four consecutive days of sickness absence. From 6th April the weekly rate is £109.40. This compares to £99.35 in April 2022.

Here to help SMEs

At The HR Dept we are set up perfectly to help SME employers prevent people problems through proactive HR advice. If you want to discuss what any of these statutory pay rate rises in 2023 mean for your business, or look at how you can structure and motivate your workforce in the future, please do not hesitate to reach out to us – we have a local office in most corners of the UK.

As well as providing ad hoc advice, we also offer an excellent value retained service called Advice Line. This provides unlimited telephone and email support.

On top of the personal, local support it provides, the unique aspect to it is that it comes with tribunal indemnity insurance. This means that if you follow our advice from the outset on an issue, you will be protected from legal fees and any awards a tribunal judge should make against you. For an SME business owner this is worth it for the peace of mind alone, not to mention the financial benefit. To find out more, get in touch.

Statutory pay figures sourced from government websites.



Looking for something specific?