National Minimum Wage changes

On 1 April 2023, the government increased the National Living Wage (NLW) rate for workers aged 23 years and over by 9.7% to £10.42. This 92p increase is the largest ever cash increase to the National Living Wage. Changes to the other National Minimum Wage (NMW) rates including % increases are below.

Paying the National Minimum Wage can be more complex than just paying workers the correct rate. These are just a few of the risks and common causes of underpayment:

• deductions and payments for items or expenses that are connected with the job
• unpaid working time for example, team handovers between shifts or time spent passing through security checks on entry and exit
• incorrect use of apprenticeship rates for example, paying the minimum wage apprentice rate when the worker is not a genuine apprentice, or paying the minimum wage apprentice rate before a worker starts their apprenticeship, or after it ends.

The government has produced a checklist of common causes of minimum wage underpayment (and on its website has links to relevant sections of the guidance). Employers should consider the list to ensure that they are paying the correct wages to all staff. Some examples of minimum wage underpayment are:

• Making wage deductions or taking payments from workers, for items or expenses that are connected with the job.
• Making wage deductions or taking payments from workers for the employer's own use or benefit where the employer is free to use that money in any way they wish.
• Failure to pay for any additional time added on to a worker's shift, for example team handovers between shifts or time spent passing through security checks on entry and exit.
• Failure to pay a worker for any time during their shift when they are at the workplace and required to be available for work, (even if no work is being provided at that time during their shift).
• Failure to pay a worker for any travelling time.
• Failure to pay a worker for any time spent training.
• Failure to pay sufficient money for any time worked during a sleep-in shift.
• Incorrectly applying the minimum wage accommodation offset when an employer provides living accommodation to a worker.
• Continuing to pay the minimum wage apprentice rate to apprentices who are aged 19 years or over when they have completed the first year of their apprenticeship.
• Failure to pay an apprentice for the time they have spent training or studying as part of their apprenticeship.
• Failure to apply the annual increase to minimum wage rates that come into effect on 1 April.
• Failure to apply the correct minimum wage rate when workers move from one age band to another at ages 18, 21 and 23-years-old.

This is a complex area and employers shopped ensure that they take specialist advice. The minimum wage can be enforced by HMRC compliance officers or by a worker making a claim in an employment tribunal or court.

To discuss this or any other employment matter, contact us.