Your supervisor earns 30p more than the new starter
Your supervisor opens at quarter to seven. She switches the alarm off, sets up the bar, takes the milk delivery, answers the allergen questions nobody else is sure about, cashes up and locks the door. Your new starter, three weeks in, makes the toast.
On this April's rates, there's a decent chance she earns 30p an hour more than him.
Nobody decided that. It happened one April at a time. Each year the National Living Wage goes up, the bottom of your pay scale goes up with it by law, and everything above it moves only if you move it. This post is about that squeeze: why it costs you more than it looks, three ways to keep a proper gap, and what each one costs a real-sized team before the April 2027 rate lands.
How a £1 gap becomes 30p
Take a hypothetical café. In spring 2024 the owner promotes a good barista to supervisor and pays her £12.50, a clear step above the National Living Wage of £11.44. A year later the rate jumps to £12.21, wages are tight after the National Insurance rise, and she gets a nudge to £12.60. This April the rate went to £12.71, and she went to £13.01.
| April | National Living Wage | Supervisor | Gap | Gap as % |
|---|---|---|---|---|
| 2024 | £11.44 | £12.50 | £1.06 | 9.3% |
| 2025 | £12.21 | £12.60 | £0.39 | 3.2% |
| 2026 | £12.71 | £13.01 | £0.30 | 2.4% |
| 2027, if only the minimum moves | £13.18 (projected) | £13.18 | £0 | 0% |
The 2024 to 2026 rates are from GOV.UK's minimum wage rates page. The 2027 figure is a projection, and I'll come to that.
Every one of those pay decisions felt reasonable at the time. Put them in a row and the supervisor's step has all but disappeared. If next April the owner only does what the law requires, she and the three-week starter are on exactly the same rate.
I've done a version of this myself: setting pay one person at a time as they joined, then letting April do the rest. You only see the shape of it when you write every rate on one sheet.
Why 30p matters more than 30p
Responsibility isn't being paid
Thirty pence over a 35-hour week is £10.50 before deductions. After 20% income tax and 8% employee National Insurance, she takes home about £7.56 a week for holding the keys, and less again once her own pension contribution comes off. That's the price of being the person who gets the call when the alarm goes off at 2am.
Nobody wants the keys
When the step up is that small, the sensible answer to "would you like to be a supervisor?" is no. More stress, earlier starts, the same money. You end up with the owner doing every open and close, or a supervisor who stays out of loyalty and leaves the day someone offers her 80p more.
It isn't just a café problem
The Low Pay Commission has been tracking this for years. Research it published on its own blog found the National Living Wage "generated substantial within-firm wage compression at the bottom of the distribution", and that pay rises happened "not just at the level of the new minimum, but also up to two pounds above it." It notes employers worry that "shrinking wage differentials" can "reduce workers' incentives to do, or progress into, more demanding roles."
That's the official version of a supervisor handing in her notice.
Losing her costs more than paying her
I've costed what it takes to replace a team member before: £3,000 to £3,500 for a typical full-timer, and towards the top of the £2,875 to £5,325 range for a supervisor. Keep that number in your head when we get to the costs below.
Three ways to keep a gap
1. A fixed pound gap
Each April, everyone gets the same pence rise as the minimum. If the National Living Wage goes up 47p, so does everyone else. Whatever gap each person has today, they keep it in pence.
It's simple and easy to explain. The weakness is slow erosion: a fixed £1.06 was 9.3% above the minimum in 2024 and would be 8.0% above £13.18. Over five or six Aprils, a fixed gap shrinks as a share of pay.
2. A fixed percentage gap
Each April, everyone gets the same percentage as the minimum. If it rises 3.7%, so does every rate. The supervisor who was 9.3% ahead stays 9.3% ahead.
This holds the gap properly over time, and costs a little more each year than the pound approach, because higher rates get bigger pence rises. In a single year the difference is small. Over several years it adds up.
Both of these hold the gaps you have now. If your gaps are already squashed, they just preserve the squash.
3. A deliberate pay ladder
The third option is to stop setting rates person by person and set them by rung. A few rungs, each with a clear rate and a clear list of what earns it, all pegged to the minimum so they move every April without a fresh negotiation.
An illustrative four-rung ladder for a café:
| Rung | Rate | What it takes |
|---|---|---|
| Starter | National Living Wage | Joined in the last three months. Till, coffee basics, allergen training done. |
| Trained | About 3% above | Signed off on the full drinks menu. Can open or close with someone else. Food hygiene training complete. |
| Supervisor (or head baker) | About 10% above | Holds keys. Opens and closes alone. Cashes up. Runs the floor and handles complaints and allergen questions. |
| Manager | About 20% above | Builds the rota, places orders, interviews, watches the weekly wage percentage. |
A few things make a ladder work:
- Write down the sign-off. "Trained" should mean a short checklist someone has actually ticked, not a feeling.
- Put it where people can see it. A rung you can see is a reason to stay. The turnover post makes the same point: people who can describe their next step stay longer.
- Pay the rung, not the person. Two supervisors on two different rates is how compression creeps back in.
- Specialist roles can share a rung. A head baker isn't a supervisor, but the responsibility is similar. Put them on the same rate unless you have a reason not to.
Costing it: a seven-person team
Here's an illustrative team, everyone 22 or over and auto-enrolled, on this year's rates:
| Role | People | Hours a week each | Rate now |
|---|---|---|---|
| Starter | 3 | 25 | £12.71 |
| Trained barista | 1 | 30 | £12.95 |
| Supervisor | 1 | 35 | £13.01 |
| Head baker | 1 | 36 | £13.60 |
| Manager | 1 | 40 | £15.00 |
That's 216 rota hours a week and £2,886.70 of gross pay. Fully loaded, it's about £191,160 a year.
Every extra £1 costs you about £1.32
For anyone already earning above the thresholds, which everyone here is, each extra pound of pay brings three on-costs with it:
- Employer National Insurance at 15% on earnings above £96 a week, or £5,000 a year (HMRC rates for 2026 to 2027): 15p.
- Pension auto-enrolment, where the employer must pay at least 3% of qualifying earnings, £6,240 to £50,270 a year for 2026/27 (The Pensions Regulator): 3p.
- Holiday pay. Almost all workers get 5.6 weeks' paid holiday, which works out at 12.07% on top of hours worked, and the NI and pension on it go through payroll too: 12.07% of £1.18, or about 14p.
So £1 x 1.18 x 1.1207 = £1.32. I went through this line by line in the true cost of the April 2026 rise; here it's all you need.
Four Aprils at £13.18
Now run each option at the Low Pay Commission's central projection of £13.18, a 3.7% rise:
| Option | Starter | Trained | Supervisor | Head baker | Manager | Extra cost a year, fully loaded |
|---|---|---|---|---|---|---|
| A. Minimum only | £13.18 | £13.18 | £13.18 | £13.60 | £15.00 | £3,308 |
| B. Fixed £ gap (+47p) | £13.18 | £13.42 | £13.48 | £14.07 | £15.47 | £6,981 |
| C. Fixed % gap (+3.7%) | £13.18 | £13.43 | £13.49 | £14.10 | £15.55 | £7,320 |
| D. Ladder (3/10/20%) | £13.18 | £13.58 | £14.50 | £14.50 | £15.82 | £11,793 |
Option A is the cheapest, and it puts four of your seven people on one rate, including the supervisor. Your trained barista has been levelled too.
Options B and C cost roughly twice as much as A and keep today's structure, squashed gaps and all. They're within £340 of each other this year.
Option D costs about £8,490 a year more than A, or £163 a week. Most of that is catch-up: putting back the supervisor gap that three Aprils took away. The supervisor rung on its own is £1.32 an hour over 35 hours, about £3,180 a year fully loaded. That's less than the cost of replacing her once.
What it does to your wage percentage
Say this café turns over £600,000 a year ex VAT. Today's wage bill is 31.9% of that, inside the 28-33% band for counter-led cafés in the wage percentage benchmarks.
On flat turnover, option A takes it to 32.4% and the ladder to 33.8%, just over the band. But very few cafés will hold prices through April 2027. With a 4% rise and the same volumes, a full year at the new prices is £624,000, and the picture changes:
- Option A: 31.2%
- Option D, the full ladder: 32.5%
Even the ladder, on those assumptions, leaves the wage percentage below where it is today. The pay rise and the price rise are one decision, not two.
If the rate lands higher or lower
The projection is a range, so cost both ends:
| £13.02 (low) | £13.18 (central) | £13.34 (high) | |
|---|---|---|---|
| A. Minimum only | £1,767 | £3,308 | £4,848 |
| D. Ladder | £9,189 | £11,793 | £14,301 |
The gap between A and D barely moves, about £7,400 to £9,500 across the range. Whatever the rate turns out to be, the cost of a proper ladder is broadly the same.
Age bands make it messier
The worked example keeps everyone at 22 or over for a reason. The current rates from GOV.UK are:
- 21 and over (National Living Wage): £12.71
- 18 to 20: £10.85
- Under 18: £8.00
- Apprentice: £8.00, for apprentices under 19 or in the first year of their apprenticeship
That gives you a second kind of compression, from below. A 20-year-old you've trained up can be paid less than a 22-year-old on day one, and both changes ahead make that gap shrink fast. The government has restated its commitment to lowering the National Living Wage age "from 21 to 18", with the Low Pay Commission given "full flexibility" on the pace. The LPC's 2026 report notes the 18-20 rate is "now at 85 per cent of the NLW rate" and discusses what would happen "Were we to recommend lowering the NLW age to 20 next year."
Nothing is decided. But if you pay by age, every move on youth rates rearranges your pay scale without you touching it. A ladder by role is easier to live with: everyone on the trained rung gets the trained rate. It costs more on the younger members of the team, so price that in if it's your choice.
Two on-cost quirks for younger staff. You pay 0% employer NI on under-21s and on apprentices under 25, up to £967 a week, according to HMRC. And you only have to enrol people automatically into a pension from age 22, once they earn over £10,000 a year. So the £1.32 multiplier overstates them; for an under-21 who isn't enrolled, it's nearer £1.12.
Before the rate lands: budget it now
As I write, the April 2027 rate hasn't been confirmed. The Low Pay Commission's consultation letter estimates that "a rate between £13.02 and £13.34 (or an increase of between 2.4 and 5.0 per cent) would be required in April 2027, with a central estimate of £13.18 (3.7 per cent)", and calls the figures "indicative only". The LPC says it will make its recommendation in October, and the Budget is on Wednesday 28 October.
You don't need to wait for it. The structure decision, A, B, C or D, doesn't depend on the exact number, as the range table shows. Decide it now and the confirmed rate becomes a one-cell change.
Three practical steps:
- Put every rate on one sheet, sorted from lowest to highest, with each person's role next to it. Compression is obvious once it's written down.
- Run your own team through the range. The free minimum wage 2027 calculator projects the April rise across your team, including NI, pension and holiday, at the low, central and high figures. If you want to compare a straight minimum adjustment against an across-the-board rise, the pay rise planner has scenario buttons for that.
- Put the chosen option into your 2027 budget. I walked through building next year's budget with the wage line at two rates, January to March on £12.71 and April onwards on the new rate. Use your chosen option's figure for April, not just option A, and set the price rise alongside it.
Then tell the team before Christmas, not on 31 March. "Here's the ladder, here's where you are, here's what gets you to the next rung" is a much better conversation to have in December than an April payslip that quietly levels your best people.
If you'd rather not keep the sheet by hand, StaffBrik holds each person's rate and their true cost of employment, NI, pension and holiday included, so the wage bill you budget from is the real one, not just the hourly rates.
The takeaway
The minimum wage rise only changes the bottom of your pay scale. Everything above it is your call, and doing nothing is a call too.
- Write every rate down in order and look at the gaps, in pence and in percent.
- Remember the £1.32. Every extra pound an hour costs you about £1.32 once NI, pension and holiday are on.
- Pick a rule: fixed pound gap, fixed percentage gap, or a ladder with clear rungs.
- Cost it across the range, £13.02 to £13.18 to £13.34, and set your April price rise alongside it.
- Fix the supervisor rung first if you can't do everything at once. It's cheaper than replacing her.
- Tell the team in December, not on the April payslip.
Thirty pence an hour is the price of nobody wanting the keys. A proper step is cheaper than you think.
Ed O'Brien has run Hunters Cake Company for 17 years across cafés in Witney, Burford, and a bakery in Carterton, Oxfordshire. He's building Brikly - modular tools that give independent café owners the same data the big chains have, without the big chain price tag.