Over the years there has been increased protection for workers within the UK. The minimum wage legislation states that workers must be paid at least the statutory minimum wage for their age.

There is some confusion as there are two types of minimum wage – the National Living Wage (NLW) and the National Minimum Wage (NMW).

From April 2021, along with the usual increases we see to our personal tax allowances, the age threshold for the National Living Wage is reduced. 

What is the National Living Wage?

From 1 April 2021, the NLW must be paid to workers aged 23 and above. This age has reduced from 25 in previous years. The NLW is a higher statutory minimum wage. 

What is the National Minimum Wage? 

Workers who are below the age of entitlement for NLW must be paid at least the National Minimum Wage. From 1 April 2021, this applies to any worker above compulsory school leaving age and under the age of 23. 

There are three age bands for NMW:

  • Workers aged 21 and 22
  • Workers aged 18 to 20
  • Workers aged 16 and 17

What about apprentices? 

These changes do not impact apprentices. The NMW is paid to workers under the age of 19 and those who are in their first year of an apprenticeship but over 19. 

What about workers with accommodation? 

Where an employer provides the worker with accommodation, they can pay a lower minimum wage, taking into consideration the cost of the accommodation provided. There is a calculation to consider that will tell you how much you are obliged to pay by deducting the ‘accommodation offset’ and varies dependent on the worker’s age. 

The daily accommodation offset rate can be deducted for each full day for which accommodation is provided. For these purposes, a day runs from midnight to midnight. The weekly accommodation offset rate is seven times the daily rate.

Rates from 1 April 2021

NLW: Workers aged 23 and aboveNMW: Workers aged 21 and 22NMW: Workers aged 18 to 20NMW: Workers aged 16 and 17NMW: Apprentice rateAccommodation offset
£8.91 per hour£8.36 per hour£6.56 per hour£4.62 per hour£4.30 per hours£8.36 per day £58.52 per week

Are you paying the right rates?

It’s vital as an employer to ensure that you are paying the correct pay to workers on the NLW or NMW, keeping in mind the changes that will take place from 1 April 2021. There need to be robust procedures in place to identify when a worker moves into a new age bracket.

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Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant