Ayres Vause

Minimum Wage – What You Need To Know

The National Minimum Wage is the hourly rate that you as an employer must legally pay the majority of your employees in return for their work. It is dependent on age and if they are part of an apprenticeship scheme. The National Living Wage is slightly different, currently sitting at £7.20, it was first introduced by the government in April 2016 and is set to rise in 2017 to £7.50 per hour. The Living Wage only applies however to over 25s with under 25s receiving minimum wage still, if applicable.

Reviewed annually by the independent Living Wage Foundation, the amount is set and monitored to ensure it is relevant and fair. Employers choose voluntarily to pay the National Living Wage, whereas the National Minimum Wage is a legal requirement with full support from HMRC. They even have the power to take employers that do not adhere to the rules to court.

Current rates of pay 2016

Changes to pay in April 2017

Who is exempt?

There are a few groups of people that fall outside of these requirements and don’t legally have to be paid either the NLW or NMW.

  1. Those who are self employed
  2. Anyone employed to do voluntary work (unpaid work)
  3. Company Directors
  4. Family members, or people who live in the family home of the employer who undertake household tasks 

Failure to pay and fines

Whilst it is illegal to not pay your workers the NMW, there are occasions when employers neglect to meet this standard. If this occurs, employees are encouraged to report the company to HMRC who will investigate fully and if they are found at fault, the employer will be required to pay 200% of the amount owed, unless the outstanding amount is paid within 14 days. There is a maximum fine of £20,000 per worker and employers can also be banned for 15 years from being company directors.

Considering the fines available, it definitely pays to pay a fair wage.

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