Are you up-to-date? Changes to minimum wage and pension contributions

By Rachel Lawler
How will new minimum wages and increased pensions contributions affect your early years setting?
As confirmed in last year’s Budget, the minimum wages are set to increase again this April, alongside an increase in the minimum employer pension contributions.
But is your childcare business ready for the change?

Minimum wage increase

In April 2019, the minimum wages for staff will increase to:
25 and over
21 to 24
18 to 20
Under 18
The minimum wage for apprentices must be paid to those aged under 19 and those aged 19 or over who are in the first year of their apprenticeship. Those aged 19 and over, who have completed their first year as an apprentice, must be paid the minimum wage for their age group.


Employers will also see increased pension costs as of 6 April 2019 onwards. The minimum contribution for employers will increase to 3% - up from 2% in 2018.pension auto enrolment
Unlike when the auto-enrolment scheme was introduced, all employers will need to comply with these new rules from the same date – 6 April – regardless of the size of your organisation.
Employees will also see their contributions increase, as they will need to pay 5% of their salary into the scheme from 6 April 2019 onwards.
All employees who are aged between 22 and the State Pension Age (currently 65), who earn more than £10,000 a year, or £833 a month, must be auto-enrolled into a pension scheme.

Static funding rates

The government has already confirmed that early years funding rates will remain frozen until 2020. With rising business costs elsewhere as well, we believe that this is completely unsustainable.
That's why our Fair Future Funding campaign is calling for the government to introduce a mechanism to ensure that funding covers the cost of delivering funded childcare places in the years to come.

Tools to help you

1. You can use our cost of childcare calculator, to help you work out your hourly cost of delivering childcare – and whether you will need to increase your rates next month.

2. Once you’ve completed the cost calculator you might find you need to change your pricing structure. If you do, you'll need to make parents aware of these changes as early as possible. Alliance members can use our template letter for parents to help do so — please log into the Members' Area to get it.

3. You can also download a template letter to send to your MP about the funding pressures you are experiencing, including the impact of this latest increase to the minimum wage, from our Fair Future Funding campaign here.

Find out more and join the Fair Future Funding campaign