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National Living Wage

The National Living Wage was introduced in the United Kingdom in 2016. The government introduced the scheme to ensure all employed individuals over the age of 23 receive a national living wage that meets the cost of everyday needs.

The government regularly reviews the wage amount. There are two main categories of statutory minimum pay: the National Minimum Wage and the National Living Wage, and it is important you understand both to protect your business from financial penalties and even prosecution if you are found to be paying your staff incorrectly. HR:4UK can offer full guidance and support with this.

This employment guide sets out the rules on the minimum levels of pay which you must give your staff.

Introduction

There is a statutory minimum that you must pay your staff which depends upon their age.

There are two main categories of statutory minimum pay – the National Minimum Wage and the National Living Wage. It is important that you are aware of the rules. Failure to pay the required rates can lead to financial penalties and, in some cases, to prosecution.

National Minimum Wage

From 1st April 2023 the National Minimum Wage rates are as follows:-

 Apprentice                £5.28 per hour *
 16 – 17 year olds     £5.28 per hour
 18 – 20 years old  £7.49 per hour
 21 – 22 years old  £10.18 per hour

* This rate is for apprentices aged 16 to 18 and those aged 19 years of age or over who are in their first year of apprenticeships. All other apprentices are entitled to the National Minimum Wage for their age.

National Minimum Wage Law

From 1st April 2023 the National Living Wage, covering all workers aged 23 and over and not in the first year of an apprenticeship, are legally entitled to at least £10.42 per hour. It is important to ensure that you and your business are complying with all required rules and regulations around National Minimum Wage legislation, HR:4UK can assist you in all aspects of compliance.

The National Minimum Wage is the lowest hourly payment that employees are entitled to. 

The National Minimum Wage legislation as set out by the UK government as part of The National Minimum Wage Act 1998 is a statutory right applicable to all workers in the UK. It is the minimum wage that employers can legally pay their workers for work performed. Its creation is to protect low-income staff.

Penalties

It is a criminal offence for you to pay someone less than the National Minimum Wage or National Living Wage or to falsify pay records.

If you find out that you have being paying your staff below the statutory minimum then you must take immediate steps to address this and repay any arrears.

Her Majesty’s Revenue & Customs (HMRC) has the authority to carry out checks at any time to ensure that you have been paying your staff what they are entitled to. It can also investigate if it receives complaints from employees that they are being paid less than the statutory minimum.

Employees also have the right to make a complaint to an employment tribunal if they are paid less than the relevant minimum wage.

The penalty imposed for any statutory minimum wage underpayment can be 200 per cent of the amount owed.  Penalties are halved if the arrears and penalty are paid within 14 days.

As an employer you can also face the risk of being banned as a company director for up to 15 years.

The government has a policy of ‘naming and shaming’ employers who fail to pay the statutory minimum. This could cause considerable damage to your reputation as a business and as an employer.

Getting it right

The penalties for failing to meet the rules on minimum pay can be substantial. To avoid these risks HR:4UK can advise you on how to comply with your minimum statutory pay obligations.

For further help and advice, speak to one of our advisors by calling 01455 444222 or complete our contact form and an advisor will be in touch shortly.

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