Following the announcement of new national living and minimum wage rates yesterday, experts reveal crucial compliance steps for businesses to avoid breaking minimum wage laws.
The experts at money.co.uk business bank accounts reveal what business owners need to know about the change and what it will mean for their enterprise.
Compliance steps for businesses:
- Understand the new rates: The first step for businesses is to familiarise themselves with the new national living and minimum wage rates. As of April 2025, these rates are:
- National Living Wage for over 21-year-olds: £12.21 an hour (from £11.44)
- National Minimum Wage for 18 to 20-year-olds: £10.00 an hour (from £8.60)
- The apprentice rate: £7.55 an hour (from £6.40)
- Update payroll systems: Businesses must update their payroll systems to match these new rates. This includes not just the hourly rates but also considering the impact on overtime, bonuses, and other pay-related factors.
- Communicate with employees: Transparency is vital. Inform your employees about the changes in their wages. This helps avoid confusion over changes in pay and demonstrates openness in employer-employee relationships.
- Review working hours and contracts: Businesses may need to review their employees’ working hours and contracts to ensure that pay remains fair, especially for those on variable or zero-hour contracts.
Potential impact on businesses:
- Increased outgoings: The most apparent impact of the new wage rates is an increase in payroll expenses. This can be particularly challenging for small and medium-sized enterprises (SMEs) operating on tight margins.
- Pricing and profit margins: To manage increased costs, businesses must reassess their pricing strategies and profit margins. This could involve increasing prices or finding cost savings elsewhere.
- Employee retention and morale: Fair wages are closely linked to employee satisfaction, retention, and morale. By embracing the new rates, businesses can foster a more motivated and productive workforce.
- Competitive advantage: Businesses that positively embrace the wage increase and communicate its benefits effectively to their employees and customers can enhance their reputation, potentially gaining a competitive advantage and hiring appeal.
Kyle Eaton, money.co.uk business bank accounts expert, comments:
“The introduction of new national living and minimum wage rates is a reminder of the ongoing impact of the cost of living for employers and employees. For businesses, it means making some logistical adjustments and financial planning, but it also offers an opportunity to reinforce their commitment to fair work practices. By proactively managing the transition, businesses can absorb the challenges of increased outgoings while emphasising the benefits for employee wellbeing and corporate reputation.”
