New national living and minimum rates came into effect from the 1st April
The national living and minimum wage rates is reviewed by the Low Pay Commission and their recommendations for April 2022 was accepted by the government in October 2021. The new rate came into effect from the 1st April 2022 but does that mean an employees hourly rate needs to be changed from the 1st April 2022? Not neccesarily. This answer might be surprising but it is because the change depends on when the employees pay periods begin and end.
When applying national living wage, you need to look at the employees pay frequency and when the employee is due to be paid.
Weekly paid employee
Let us look at a weekly paid employee. They are paid every Friday. They were paid on Friday 1st April and due to be paid again on Friday 8th April.
Even though the national living wage changed on 1st April, it only applies to earnings paid for a full pay period. So because the 1st April is the end of the pay period, national living wage will apply from the 2nd April.
Monthly paid employee
An employee is paid on the 15th of the month. As the pay reference period runs from the 16th March until the 15th April, national living wage will apply from the first full pay period. So national living and minimum wage will apply from the 16th April.
It is important to know when your employees are paid and when the pay reference periods are to make sure you apply the correct rates.