Are you aware of the legislation in place that states what the National Minimum Wage and National Living Wage are? Do you know what the consequences are if you are paying staff under this amount? To find out more continue reading the blog below.

What do I need to know?

From the 1April 2019, The National Living Wage (NLW) and National Minimum Wage (NMW) has increased. This means that from this date the NLW for workers aged 25 and above is set at £8.21 per hour.

What is the National Minimum Wage?

The NMW for workers who are under 25 and over school leaving age are the following:

  • £7.70 per hour for workers aged 21-24
  • £6.15 per hour for workers aged 18-20
  • £4.35 for workers above school leaving age but under 18.
  • £3.90 per hour for apprentices under 19.

Who does it apply to?

Workers over the age of 16 are entitled to the minimum wage, and once a worker is 25, they are entitled to the NLW.

The following workers would be entitled to NLW and NMW:

  • Full time workers
  • Part-time workers
  • Agency workers
  • Apprentices
  • Foreign workers
  • Workers on probation
  • Trainees
  • Disabled workers
  • Offshore workers

If you are a company director, self-employed, or a voluntary worker and do not have a contract of service then you will fall outside the minimum wage legislation.

What do I need to do?

As a director you must identify, which workers fall within the scope of the minimum wage legislation, to be able to pay them correctly.

What is included in the minimum wage?

The following factors are taken into account when calculating the NMW:

  • National insurance
  • Income tax
  • Advances on wages or loans
  • Repayment of overpaid wages
  • Penalty charges for workers misconduct
  • Accommodation provided by the employer

The following factors are not taken into account when calculating the NMW:

  • Tools
  • Tips and service charges
  • Uniform
  • Extra pay for unsociable hours

You should be aware that if you are providing your staff accommodation then from the 1 April 2019 it is set at £7.55 per day.

If you decide to charge more for accommodation, then the excess will be taken out of the workers pay.

What happens if I do not pay minimum wage?

If you choose to not pay your workers their entitled National Minimum Wage or the National Living Wage, then you will be committing a criminal offence, and will be issued with penalties.

Further Actions

You must make sure that as an employer you are paying your staff the national minimum wage according to their age.

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Any questions?
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• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk