Changes are coming to the National Minimum Wage and National Living Wage on 1st April 2020, and it’s important that businesses are aware of the increased rates that will be implemented very shortly.
These new rates mean that full time workers over 25 receiving NLW should be seeing a £930 increase in their annual pay, which adds up when applied to all employees.
The increase in minimum wage rates are as follows:
- The rate for 16 – 17 year olds raises from £4.35 to £4.55 per hour (4.6%)
- The rate for 18 – 20 year olds raises from £6.15 to £6.45 per hour (4.9%)
- The rate for 21 – 24 year olds raises from £7.70 to £8.20 per hour (6.5%)
- The rate for 25 plus year olds raises from £8.21 to £8.72 per hour (6.2%)
- The rate for apprentices raises from £3.90 to £4.15 per hour (6.4%)
The Low Pay Commission (LPC) are the ones who recommended the increase in pay, and estimate that it is going to benefit around 2.4 million workers throughout the UK.
This most recent rise in wages follows the Government’s promise during it’s conference in September to increase National Living Wage up to £10.50 an hour over the next 5 years, quoting “if economic conditions allow”.
Chancellor Sajid Javid has said “We want to end low pay and put more money in the pockets of hard-working families. This latest rise will mean that since we introduced the National Living Wage in 2016, the lowest paid will have had a wage increase of more than £3,600.”
Are you fully aware of the importance of the National Living & Minimum Wage?
What Is The National Minimum Wage?
The National Minimum Wage is the minimum amount of pay that a UK worker is entitled to per hour according to UK law.
These rates are set by the Government and vary depending on how old a person is. The current age groups include under 18, 18 to 20, and 21 to 24, as well a separate rate for apprentices.
The minimum amount paid to each worker goes up the older they get, with 21 to 24 receiving the largest rate and apprentices receiving the lowest rate. It should be noted that the apprentice rate only applies to apprentices who are under 19 or in their first year of the apprenticeship if they are over 19.
The NMW was initially introduced back in 1999, and the change of rates have been reviewed and decided by the LPC since, making recommendations to the Government. The hourly rates change each April, and are usually announced during the Budget in the later half of the year.
People aged 25 and over used to be eligible for the National Minimum Wage, but something called the National Living Wage was introduced a few years ago to replace it.
What Is The National Living Wage?
The National Living Wage is for any workers aged 25 or over, and is the highest rate of the National Minimum Wage.
The National Living Wage was first introduced in April 2016 with the aim to “reduce reliance on the state topping up wages through the benefit system”. This wage was implemented at a higher rate than the previous National Minimum Wage rate, and is expected to rise to up to £9 per hour by 2020.
Who Is Eligible To Receive National Minimum Wage?
Almost every worker in the UK is entitled to receive the NMW, including casual workers, part-time workers and temporary workers.
You need to be at least school leaving age to be eligible for minimum wage, which is after the last Friday in June of the school year in which you turn 16. Most employers who hire under 18s require people to be at least school leaving age before applying anyway.
People who are not entitled to the NMW or NLW are anyone who is self-employed, voluntary workers, members of the armed forces, company directors and students on work experience.
What Do These Changes Mean For Employers?
The changing of the National Minimum Wage means that employers will have to look at their payroll and make changes accordingly.
While the rates may have only increased slightly, the additional pennies can add up and end up costing your business a lot more on a daily, weekly and monthly basis.
All businesses must adhere to these changes by law, and failure to do so with lead to legal repercussions and a backlash from current employees.
Is your business ready to embrace these changes in pay?
What To Do If You Believe You Are Being Paid Less Than Minimum Wage
If you believe that you are being paid or have been paid lower than your age group’s minimum wage, it is very important that you bring up this issue with your employer.
It can be something as simple as an employer not knowing that the rates have gone up, but it is definitely an issue that needs to be dealt with quickly. Failing to pay minimum wage is a legal offence, and should not be taken lightly.
Another option would be to take the issue straight to HM Revenue and Customs (HMRC). If HMRC decides that you have been paid incorrectly, your employer will have to pay out for the money that you are owed, as well as paying a fine for failing to pay the National Minimum Wage.
It is always advised to speak to your employer about any pay issues first, and always keep a record of your payslips just in case.
Where We Come In
Wurkplace provides outsourced payroll and HR support to businesses throughout the UK.
We have a team of dedicated professionals that have experience in dealing with employee contracts, payslips, HMRC and PAYE. We can advise and implement policies and procedures that suit everyone and keep your business risk free.
Our experts can help you save valuable time and money on payroll processing, and can review employee contracts and handbooks to meet the current legislation. We also have our own HR Software Solution that allows for more accurate timesheet thanks to the employe fingerprint clocking in system.
To learn more about the upcoming changes to the National Minimum & Living Wage and how it will affect your business, get in touch today.