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Thousands of workers will miss out on April’s minimum wage rise

Paloma Kubiak
Written By:
Paloma Kubiak

The National Living Wage and Minimum Wage rates rose on 1 April but thousands of furloughed workers won’t see these higher rates filter into their pay for a while.

Under the government’s Coronavirus Job Retention Scheme, companies can apply for a grant to cover 80% of furloughed employees’ wages, up to a monthly cap of £2,500.

Workers are furloughed if their firm cannot cover the cost of their salaries due to coronavirus.

However, the guidance states businesses can only claim for furloughed employees that were on their PAYE payroll on or before 19 March (the original date was 28 February 2020 before being pushed back) and they can only claim for the 80% of the employee’s salary, as of this date.

This means the National Living Wage and Minimum Wage rise which came into effect on 1 April (£8.72 per hour for those aged 25 and over, though see the link for a full break down of rates for younger workers) won’t currently apply to furloughed workers.

Further, furloughed workers on the minimum wage may be paid less than the legal requirement if they are only getting 80% of their salary, though employers do have the option to top up salaries to 100%.

The guidance to employers states: “You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.”

Kay Ingram, director of public policy at independent financial advisory firm LEBC, said: “The financial help from the government had to be rushed out quickly, so it is not surprising that some aspects have led to anomalies.

“It is logical that if someone is doing no work for the period of furlough that the concept of a minimum hourly rate may seem irrelevant. However, for those working at minimum wage levels, the absence of the promised increase could cause hardship and maybe it is something which the Treasury could review, especially if the lockdown is extended beyond the initial three weeks.”

Workers can be furloughed for a minimum of three weeks and the job pay scheme was initially in place for three months, starting 1 March, before being extended till the end of June.

For more on what being furloughed means, read our guide.