National Minimum Wage and National Living Wage 2024 Increases and Their Impact on the Hospitality and Leisure Sector

As of 1 April 2024, the rates of NMW and NLW have increased in accordance with the Low Pay Commission’s recommendations.

Notably, the NLW will apply to a lower age group of those aged 21 and over.

The right to receive NMW and NLW applies to most workers (with some exceptions).

The increase does not merely affect the financial position of employees’ but often creates a ripple affect across the businesses in the Hospitality and Leisure sector who employ staff mainly on a national minimum wage pay basis.

Our employment blog aims to discuss the impact of the national minimum wage increases in the hospitality and leisure sector.

Those in the hospitality and leisure sector often rely heavily on a workforce that includes entry-level employees, part-time workers, students, and interns.

Accordingly, changes to minimum wage rates often have a considerable impact on operational processes, such as: 

1. Financial strains

Many businesses within the hospitality and leisure sector operate on tight profit margins. An increase in minimum wage rates directly translates to higher labour costs, which can strain the finances, especially for small and medium-sized businesses. 

2. Re-evaluation of pricing strategies

Hospitality and leisure outfits may need to consider reassessing their pricing strategies as a direct result of the increased costs on staff. This could involve adjusting membership fees, service charges, or product prices. However, implementing price increases must be approached cautiously to prevent business loss, especially in the current financial climate. 

3. Increased morale and productivity

That being said, a positive impact linked to the increase is that higher minimum wages can contribute to improved employee morale and productivity within the workforce. When workers feel adequately compensated for their efforts, they are more likely to remain loyal to their employers, deliver better customer service, and contribute positively to the overall workplace environment. 

Employers should have already prepared for the increase in minimum wage rates by reviewing current pay packages and keeping adequate records of payment (kept for at least 6 years) to show compliance. 

Employers have a duty to resolve any backdated non-payment of wages even if the individual no longer works for the business, so any underpayments identified should be resolved as soon as possible and recorded. 

Calculating NMW and NLW is a tricky area of law.