21st March 2018
It’s getting closer to that time of year again, and no, we’re not talking about chocolate eggs and long bank holiday weekends. We’re talking about the National Minimum Wage and the National Living Wage increase, which occurs in April every year.
The increase in pay rates depends mainly on the age of your employee, and whether they’re an apprentice or not. This means that you may witness a number of different rate fluctuations across your spectrum of staff, but one thing is certain - employers who pay a worker below the correct minimum wage are subject to heavy disciplinary action, so it’s best to get it right the first time around.
In this article, we bring you everything you need to know about the rise in the minimum wage, what it means for your business and the necessary steps you should take to make sure you’re ready for the change.
The National Minimum Wage is the lowest remuneration that employers can legally pay their workers. Employees must be at least school leaving age (16) to get the National Minimum Wage.
Those aged 25 and over are eligible to receive the National Living Wage. Introduced by the government in April 2016, the National Living Wage replaces the National Minimum Wage for those aged over 25, and is calculated according to the basic cost of living in the UK. You can read more about the National Living Wage and its implications for employers in our previous blog post here.
The chart below shows the current National Minimum Wage and National Living Wage, and how the rates are set to increase this year across all age brackets:
25 and over | 21 to 24 | 18 to 20 | Under 18 | Apprentice | |
Current Rates | £7.50 | £7.05 | £5.60 | £4.05 | £3.50 |
Rates from 1st April 2018 | £7.83 | £7.38 | £5.90 | £4.20 | £3.70 |
With these changes, workers aged under 25 will see the largest increase in a decade in their statutory minimum wage from April 2018, according to the Low Pay Commission.
It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to fake payment records. HM Revenue and Customs (HMRC) has the right to carry out checks on companies at any given time, and they can also investigate employers if a worker complains to them.
So, with that in mind, it is vital that you pay full attention and be fully compliant with the rise in minimum wages. Here are a few steps you can take to ensure you are prepared for the change:
The government is committed to increasing the National Living Wage annually, with plans to hit £9 per hour by 2020. So, it is imperative that you take the necessary steps to ensure you are prepared for the increase in 2018 and beyond.
Below, you can find some extra, proactive steps you can take to ensure you are prepared for the increase both this year and in the years ahead:
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