The National Minimum Wage (NMW) receives a review every year. There’s no commitment to increase the amount, but the hourly total does change from time to time.
If you pay any of your staff the NMW and you fail to increase their pay correctly, you could be breaking the law.
In the past, organisations have been publicly named and shamed, as well as given a hefty fine.
With that in mind, here’s everything you need to know and how to remain compliant with the changes.
What is the National Minimum Wage?
The NMW came into force in July 1998 via the National Minimum Wage Act. It defines a minimum hourly rate you should pay your employees and workers.
These rates are subject to review and change in April every year.
The National Minimum Wage rates
Because the rates change, it’s important to keep on top of them. It’s worth reviewing your pay structure every April to ensure you’re not dipping below the legal requirement.
The hourly rate depends on the individual’s age, and whether or not they’re an apprentice.
From April 2021, the National Minimum Wage rates will be as follows:
National Living Wage (23+): £8.91
21-22 Year Old Rate: £8.36
18-20 Year Old Rate: £6.56
16-17 Year Old Rate: £4.62
Apprentice Rate: £4.30
Accommodation Offset: £8.36
The National Minimum Wage over age 23
The rate for 23 and over applies to every age over 23. A 70-year-old will earn the same on the NMW as a 30-year-old.
Do I have to pay the National Minimum Wage to apprentices?
You have to pay at least the NMW, yes. But you can choose to pay more if you feel it’s appropriate.
There are additional rules when it comes to apprentices and minimum wage. When they reach a certain age for example, the situation changes—another is when they’re no longer in the first 12 months of their apprenticeship.
How do I ensure I’m paying the NMW?
A common reason employers get caught out is they deduct the cost of uniforms and other expenses from employees’ wages. This dips them below the National Minimum Wage.
Another reason for these types of dips in pay is the failure to pay for travel time where travel is a crucial part of the individual’s job role.
The National Minimum Wage in the UK is taken very seriously, and failure to pay it has severe consequences.
To ensure compliance it’s worth conducting a salary benchmarking review. This has the additional benefit of keeping your rates competitive.
Also, keep an eye out for any case law updates on pay—you can find these types of updates on our blog.
If you still have queries about the National Minimum Wage, download your free guide by clicking the button below or speak to a Croner expert on 0800 470 2795.
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