Make sure you get your wage levels right

We have reported in previous newsletters on the increasing levels of the minimum wage and the National Living Wage.

We have reported in previous newsletters on the increasing levels of the minimum wage and the National Living Wage.

The hourly rate for the minimum wage depends on a worker's age and whether or not they are an apprentice. This has important implications for employers - who must ensure that they keep pace with the increases.

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to. The National Living Wage is higher than the National Minimum Wage - workers get it if they are over 25.

It does not matter how small an employer is, they still have to pay the correct minimum wage.

The worker must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 25 to get the National Living Wage - the minimum wage will still apply for workers aged 24 and under

In our October 2016 newsletter, we reported on the penalties for failure to comply with the rates.  On 6 January 2017, the Guardian reported that around 700 firms have been fined a total of nearly £1.4m for not paying the minimum wage. The Guardian mentions some headline grabbing employers such as a football club and (allegedly) 'Boris Becker's favourite Wimbledon restaurant'.

Interestingly, the sums recovered by HM Revenue and Customs do not amount to the full amount of the sums which should have been paid. The fines only amount to about 40% of the sums owed - HMRC has the power to fine up to 200% of the money owed.  This has led to some criticism including the catchy phrase: 'For too long ministers have been soft on hard labour.'

The Government has 'named and shamed' non-complying employers since 2013. This is still considered to be an effective deterrent.

A reason put forward for non-compliance by many smaller employers is that they have not had the help and support needed to adapt to the many legal changes imposed in recent years.

This report is therefore an important reminder at the start of the new year to ensure that your organisation is paying the correct sums due to employees.

To discuss this or any other employment related issue, contact us.