New minimum wage rates
Apr 06, 2018
As we flagged this time last year, rates for the National Minimum Wage and the National Living Wage are now set to increase annually every April.
This table illustrates what changes now apply from 1 April 2018 until March 2019:
The rate for apprentices only applies to apprentices under 19 years old, or to those aged over 19 but in their first year of apprenticeship. All other apprentices are entitled to the National Minimum Wage (NMW) for their age.
Remember that there are strict penalties for non-compliance with the NMW. HMRC are the body who enforce the NMW, and if they find that you have underpaid any worker they will issue you with a notice of underpayment. This will show the arrears that you must pay your workers, plus the penalty you must pay HMRC. Since April 2016 the maximum penalty is 200% for underpayment, and the maximum penalty is £20,000 per worker, not per notice. Details of how and where to appeal are included with the notice of underpayment, and further information about enforcement of the NMW is available online.
Side-effects of minimum wage increases
Watch out if these latest minimum wage rates have increased your employees’ earnings (even part time) to above £10,000 per year. This is the earnings trigger for workplace pensions auto enrolment, and if any of your employees earn over this threshold then you must set up and enrol them onto a pension scheme.
If your employees wear a staff uniform, then this also needs to be considered in light of minimum wage increases. When employees need to buy their uniform from you, you can deduct the cost from their pay. But beware – this purchase mustn’t take their wages below the NMW rates. Even if your require your employees to wear particular clothing, such as black trousers and black shoes, then the cost of buying these garments mustn’t take their wages below the minimum rate. The restaurant chain Wagamama was recently in the news because it had to repay £133,212 to 2,630 of its workers, due to not factoring uniform costs into their wage calculations. If, however, you provide free uniforms, or your staff choose to buy extra items with their own money, this doesn’t affect their wages.
Please give us a call if you have any queries about the minimum wage and how it may affect your business.