Low Pay Commission sets out plans for National Minimum Wage in 2025
The Low Pay Commission (LPC) is an independent public body that advises the Government each year on the National Minimum Wage (NMW) and National Living Wage (NLW). On 30 July 2024, the Government issued a new remit for the Low Pay Commission, which applies to the rates that take effect from April 2025.
The government intends to ultimately abolish the 18-20 Year Old Rate of NMW, achieved by a gradual lowering of the NLW age threshold to 18 years of age, which is already in progress.
This means that 18 - 20 year olds stand to have a bigger pay increase in April 2025, and employers with workers who fall into this threshold should be factoring this into their financial projections.
The LPC’s response goes into detail about the calculations required to respond to the remit - read them here - but the headline figure is that employers should also bear in mind that the LPC’s current central estimate is that an NLW increase in the region of “a range around our central estimate which runs from £11.82 to £12.39” [with £12.10 in discussion] would be required to maintain the ratio of the NLW to median hourly pay, at two thirds of median earnings (a figure up on the previous projection).
If the figure ends up at the upper end of the estimate, it could be in the region of around £1 more an hour for 21 and over (current rate is £11.44) so employers should build this into their pay projections for 2025.
The recommendations are due to be made by the Low Pay Commission by October 2024.
Posted on 09/11/2024 by Ortolan
