How to avoid the wrath of the National Minimum Wage ‘Police’

minimum wage policy

Current Rates (April 2024)

By law, your employer must pay at least the National Minimum Wage (NMW). The government reviews minimum wage rates every year and they’re usually updated in April. Here are the current rates as of the 1st of April 2024:

minimum wage rates UK 2024

Did you know that HMRC recently published a list of over 500 UK businesses that had been found guilty of not abiding by the National Minimum Wage (NMW) regulations? These companies included large PLCs as well as very small employers.

The rules are complex and it’s easy to fall foul of them and this can lead to both fines and a breakdown of relationships with employees.

How to avoid breaching the National Minimum Wage policy

Here are three things you need to remember when checking none of your employees are paid below the legal requirement:

1) Overtime

Whilst there is no legal requirement to pay staff for extra hours they’ve worked (unless contractual) it is vital to check that their average hourly rate including all hours worked is above the NMW rate for their age bracket. This is particularly relevant for workers on an annual (fixed) salary who occasionally work unpaid overtime and are perhaps earning just above the NMW.

2) Deductions from wages

It’s fine to deduct PAYE and employees NI and certain other statutory deductions but others (eg uniforms, accommodation, training, food, cycle to work schemes and childcare) could be illegal if it takes the employee below the NMW that week / month. Always check with your accountant or HR adviser if you’re unsure.

3) Birthdays

When an employee earning NMW reaches 18, 20 or 21 years of age then their hourly rate will increase. It’s vital their correct date of birth is entered into your payroll software and the software is up to date.

You could also consider outsourcing your payroll to a team of professionals like 5 Four Payroll Services.

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