Businesses owners and employers should be aware that new and increased National Minimum Wage (NMW) and National Living Wage (NLW) rates are coming into effect on 1st April 2019.

  • The NMW is the minimum pay per hour that most workers under the age of 25 are entitled to by law
  • The government’s NLW is the minimum pay per hour most workers aged 25 and over are entitled to by law.

Failure to comply with paying the NMW/NLW will either lead to an Employment Tribunal claim or with HM Revenue & Customs taking the employer to court. It is crucial, therefore, for businesses of all sizes to ensure that they’re up-to-date with the changes. The appropriate rates of pay will depend on a worker’s age and whether they’re employed as an apprentice or not. Note that if a worker is paid above the NMW, there is no legal obligation on an employer to increase their pay when the rate increases.

Preparation for the upcoming changes

  1. Ensure you have the correct details for each employee, such as their birthday, and whether they are employed as an apprentice.
  2. Check what rate you should be paying each worker and note that there are different rates for different categories of workers.
  3. Update your payroll for each employee to ensure that you are paying the correct amount.

The new rates are shown in the table below:

Category of Worker Current Rates New Rates Increase
25 and over £7.83 £8.21 + £0.38
21 to 24 £7.38 £7.70 + £0.32
18 to 20 £5.90 £6.15 + £0.25
School leaving age to 17 £4.20 £4.35 + £0.15
Apprentice £3.70 £3.90 + £0.20

Note that the apprenticeship rate only applies to apprentices either under the age of 19, or those aged 19 or over but in the first year of their apprenticeship.

Exceptions to the rates of pay

The NMW and NLW do not apply to:

  • self-employed people
  • volunteers or voluntary workers
  • company directors
  • members of the armed forces
  • family members, or people who live in the family home of the employer who undertake household tasks
  • work experience students, depending on the length of their placement.

All other workers, including part-time, casual, agency, pieceworkers, home workers and commission workers must receive at least the NMW or NLW.

Some people may need to have adjustments made to their NMW if they live in accommodation which is linked to their employment or owned by their employer.

Failure to comply: what to expect

If an employer doesn’t pay the correct rate, a worker should first talk to their employer and try to resolve the issue informally. If an informal approach fails, the employee has the option of raising a formal written grievance.

If the situation cannot be resolved internally, a worker could choose to make a complaint to an Employment Tribunal. Bear in mind that most tribunal claims have a three-month time limit to be submitted. However, this time limit effectively pauses if Early Conciliation is taking place.

Alternatively, a worker can make a complaint to HMRC who will investigate. This can be done anonymously if the worker chooses. If HMRC find that an employer has failed to pay at least the NMW, they can send a notice of arrears and impose a penalty for not paying the correct rate to the worker.

The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will also be banned from being a company director for up to 15 years.

 

If you would like to discuss any of the information raised in this article, then you can contact a member of the Employment Team on 01626 202404 or lawyer@wbw.co.uk and they will be happy to answer any questions or queries that you may have.

For all your legal needs, contact WBW Solicitors today.