National living wage and national minimum wage - new rates!
From 1 October 2016, the national living wage and national minimum wage have increased.
The hourly rate for the minimum wage depends on a worker's age and whether or not they are an apprentice. This has important implications for employers - who must ensure that they keep pace with the increases.
The National Minimum Wage is the minimum pay per hour almost all workers are entitled to. The National Living Wage is higher than the National Minimum Wage - workers get it if they are over 25.
It does not matter how small an employer is, they still have to pay the correct minimum wage.
The worker must be at least:
- school leaving age to get the National Minimum Wage
- aged 25 to get the National Living Wage - the minimum wage will still apply for workers aged 24 and under
Current rates
These rates are for the National Living Wage and the National Minimum Wage from 1 October 2016:
|
25 & over
|
21 to 24
|
18 to 20
|
Under 18
|
Apprentice
|
|
£7.20
|
£6.95
|
£5.55
|
£4.00
|
£3.40
|
National Minimum Wage rates change every October. National Living Wage rates change every April.
Penalties
It is unlawful for employers to pay workers less than the National Minimum Wage or National Living Wage. If an employer does not pay the correct rate, a worker can raise a formal grievance with their employer or complain to HMRC who will in turn investigate the matter. If HMRC finds that an employer has not paid at least the correct rate, they can send a notice of arrears and impose a penalty.
From April 2016 the maximum penalty increased from 100% of arrears to 200% or arrears (but is halved if paid within 14 days). The overall maximum penalty per worker remains unchanged at £20,000. Business owners who fail to pay can also be banned from being company directors for up to 15 years.
If you are an employer you are well advised to ensure that your administrative systems are up to date and can cope with the rate changes. These changes will have an impact on overall wages bill costs and pensions / NI contributions so it is essential for employers to stay on top of the changes.
To discuss this or any other employment related issue, contact us.