How much do you know about the living and minimum wage?
Chances are you have a passing acquaintance with the system, but are you sure your company meets all the criteria for all your different types of staff? If not, it’s vital to get yourself up to speed as soon as possible.
The National Living Wage (NLW) applies to most workers over the age of 25 and is the minimum amount they must be paid by law.
Its stablemate, the National Minimum Wage (NMW), applies to most workers under the age of 24 and is again a legal entitlement.
These are not guidelines – they are minimum pay rates enshrined in law for those workers entitled to them. And there are some pretty hefty penalties for failing to comply.
Under the National Living Wage, the penalty for non-payment is 200 per cent of the amount owed, unless the arrears are paid within a fortnight. The maximum fine for non-payment stands at £20,000 per worker, with the added penalty of an employer being banned from being a company director for up to 15 years.
So it’s worth getting things right.
At the start of this month, the National Living Wage rate increased to £7.83 per hour.
Meanwhile, If you employ staff aged between 21 and 24 you’ll now have to pay them at least £7.38 per hour or £5.90 per hour for workers aged 18 to 20 under the NMW.
Alongside this, the rate has increased to £4.20 for workers under 18 who are no longer of compulsory school age whilst the apprentice minimum wage rate is now £3.70 per hour and the accommodation offset has risen to £7.00 per day.
The NLW applies to all pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers.
But just to complicate matters there are several exemptions for people who are not entitled to these statutory minimum pay levels.
In a nutshell, the following groups are not entitled to the NLW or NMW:
- Self-employed people.
- Volunteers or voluntary workers.
- Company directors.
- Some agricultural workers
- Some family members, or people who live in the family home of the employer who undertake household tasks.
Meanwhile the apprenticeship rate only applies to:
- apprentices aged under 19
- apprentices aged 19 or over who are in the first year of their apprenticeship
Guidance from ACAS says that apprentices aged 19 or over in their second year of an apprenticeship must receive the national minimum wage or national living wage rate their age entitles them to.
What started out as a relatively straightforward scheme, has become more and more complicated. If you need help to guide you through the legislation, contact us today for a free consultation. We’re happy to help.