From 1 April, the National Living Wage (for employees aged 25 and over) will increase from £8.21 to £8.72. Minimum Wage will increase from £7.70 to £8.20 for 21 to 24 year olds, £6.15 to £6.45 for 18 to 20 year olds, and £4.35 to £4.55 for 16 to 17 year olds. For apprentices aged under 19 or in their first year of their apprenticeship, Minimum Wage will increase from £3.90 to £4.15.
It’s probably also a good time to review your pay arrangements to check that you’re not falling foul of the NMW rules, which is surprisingly easy to do. They sound simple on the face of it, but the rules are pretty complex once you look into the detail. An obvious trap is failing to spot that one of your employees has become entitled to a higher rate of pay because they've had a birthday and have moved into the next NMW bracket. But even if you're on top of that, there are other complications that are not immediately obvious. For example:
- Someone might have worked some hours before their birthday - but you can't pay those hours at the rate appropriate to a younger employee. It's their age on payday that matters.
- If an employee is paid by results rather than for working a certain number of hours (for example a commission-only salesperson), you still have to ensure they're being paid at least NMW for the hours they work.
- Tips don't count! Employers are not allowed to rely on tips to top their staff's wages up to NMW.
- If you pay someone a higher hourly rate for overtime hours, the extra bit can't be used to subsidise a basic pay rate that's below NMW.
- Employees must be paid at least NMW for any time they spend travelling on business, for example travelling between client appointments or travelling to training sessions.
- If an employee has to meet expenses to do their job (e.g. buying tools, uniforms or equipment) and you don't reimburse them, then those expenses are deducted from the amount of salary you pay them before calculating whether they've been paid NMW.
There are lots of technical details that could easily catch employers out, so if you have staff who are being paid salaries at or close to NMW, do check the detailed guidance online (or speak to your HR adviser if you have one) if you have any doubts about whether you're complying with the rules!
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