NMW traps
The national minimum wage (NMW) is increasing again, but this time the new rates take effect from 1 April 2017 instead of in October. This will be the second compulsory pay rise in just over six months for some of your younger employees.
The good news is that in future all increases in the NMW and living wage will take effect from 1 April each year.
It is important to identify which workers should receive which level of NMW, and how the amount per hour should be calculated. Certain high-profile employers have fallen foul of the rules when their staff worked unpaid overtime. Every worked hour must be counted for the NMW calculations.
Any underpayment of NMW could land you with a penalty of up to 200% of the underpaid amount, up to £20,000 per worker, with a minimum penalty of £100 per worker.
Your business could also be publicly named if the amount due exceeds £100. The bad publicity generated by HMRC won’t explain that the underpayment of NMW was due to an innocent mistake in the calculations – even if it was.
| The new hourly rates are: | |||||
|---|---|---|---|---|---|
| For pay periods starting after | 25 & over (living wage) | 21 to 24 | 18 to 20 | Under 18 | Apprentice |
| 1 April 2017 | £7.50 | £7.05 | £5.60 | £4.05 | £3.50 |
| 1 October 2016 | 7.20 | 6.95 | 5.55 | 4.00 | 3.40 |