Minimum wage: know the rules, not just the rates.
Forthcoming changes highlight the need for employers to deal confidently with the underlying rules. Notably, from 1 April 2024:
We use the term ‘minimum wage’ to refer to both the NLW and NMW.
Minimum wage is complex, and a slip up in the underlying calculations can put employers at risk. The danger is not just confined to sectors like retail, hospitality, and cleaning and maintenance, where historically many workers have been paid at or below minimum wage. Because there is so little margin for error, employer risk also arises where payment to workers sits at, or just above, minimum wage. Something like payment into a salary sacrifice scheme can easily the tip the scales, creating an underpayment for a previously compliant employer.
Steps to compliance:
HMRC regularly names and shames employers who make mistakes resulting in underpayment. The most common problems occur when paying apprentices; making deductions from pay which take wages below minimum wage; and not paying for working time correctly.
Compliance with the rules is far from straightforward, and we have only been able to provide an overview here. Please contact us for help or further information.