From April 2025, significant amendments to the National Minimum Wage/Living Wage and Employer NI contributions will come into effect. It’s crucial for both employers and employees to understand these changes to ensure compliance and fair compensation.

 National Minimum Wage & National Living Wage Rates

The UK government has announced the following updated wage rates from the 1st April 2025:

• National Living Wage (for workers aged 21 and over): £12.21 per hour (an increase of 6.7% from £11.44) ​

• 18-20-year-olds: £10.00 per hour (an increase of 16.3% from £8.60) ​

• 16-17-year-olds and Apprentices: £7.55 per hour (an increase of 18% from £6.40) ​

These adjustments aim to reflect the rising cost of living and ensure fair compensation across all age groups. We recommend that you notify in writing all staff that this applies to.

Impact on Commission-Based Pay Structures

For employees earning commissions, it’s essential to ensure that total earnings meet or exceed the applicable minimum wage rates. Employers must:

• Monitor Earnings: Regularly review that employees’ combined base pay and commissions average at least the minimum wage over the pay period (i.e. paid weekly, monthly).​

• Adjust Base Pay if Necessary: If commissions are unpredictable and may mean that an employee is not paid the NMW in pay period, consider setting a higher base salary to guarantee compliance with minimum wage laws.​

• Maintain Accurate Records: Keep detailed records of hours worked and earnings to demonstrate compliance.​

Additional Employment Law Changes

Beyond wage adjustments, the Employment Rights Bill introduces further reforms later in the year, these are not yet in force but you should be aware of what is coming down the road:

• Guaranteed Hours for Zero-Hours Workers: Employers will be required to offer guaranteed hours to zero-hours workers and those on low guaranteed hours who regularly work beyond them. ​

• Compensation for Shift Cancellations: Workers will be compensated for shifts that are cancelled or end early. 

• Enhanced Sick Pay: Statutory Sick Pay will increase to £118.75 per week. ​

• Extended Family Leave Pay: Statutory Maternity Pay and other family-related leave pay will rise to £187.18 per week. ​

Employers should review and update their policies and contracts to align with these changes.

Employer National Insurance Contributions

As of 6th April 2025, significant changes to National Insurance contributions (NICs) will take effect, impacting both employers and employees.

• Increased Rate: The rate of employer NICs will rise from 13.8% to 15%. 

• Lower Secondary Threshold: The threshold at which employers begin paying NICs for employees will decrease from £9,100 to £5,000 per year.