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.
So,
what exactly is the National Minimum Wage and the National Living Wage?
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.
So,
how will the increase in the National Minimum Wage and the National Living Wage
affect my business in particular?
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:
What
does the future look like?
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:
Let us
know about how the increase in the National Minimum Wage and the National
Living Wage is affecting your business, and what steps you’re taking to ensure
you’re prepared, by dropping us an email at Services@JVPGroup.co.uk or give us a call on 01745 774 955.
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