National Minimum Wage – are you paying the correct minimum rates ?

The National Minimum rates of pay are;

For the year beginning                                                         6th April 2023      6th April 2024   

                                                                                         Per Hour             Per Hour

Age 23 and over                                                                         10.42                  11.44

      21-22                                                                                10.18                  11.44

      18-20                                                                                  7.49                    8.60

Apprentices or those under age 18                                                5.28                    6.40  

Note that these rates apply with effect from 6th April each year. The change on 6th April 2024 can be a significant increase in cost for those who have lower paid employees. We are pleased to offer a payroll service at competitive rates.                 

Generally, the employee must be paid at the minimum rate without deductions other than those prescribed for by the PAYE code, National Insurance contributions, and for a workplace pension scheme. If an employee has been paid in advance, or provided with a loan before their normal payday, the repayment of that sum can also be deducted from their pay.

Where a business might be caught out, as indeed happened in the cases of 182 employers whose names were published between 2019 and 2022, is where deductions are made from the pay of those employees who are paid at close to the minimum rates. Examples of such deductions which took place were for the cost of;

1.    Food, meals, or refreshments,

2.    Training,

3.    Childcare costs,

4.    Salary sacrifice schemes,

5.    Purchase of overalls or other clothing.  

After such a deduction the employee must still be paid at least the minimum rate of pay. If HMRC finds that an employer has not paid the minimum wage, they can issue a notice

to pay money owed going back for a maximum of 6 years. They can also issue a fine of a

minimum of £100 for each employee affected and up to a maximum of £20,000.

They may also name and shame you in a published list of offenders. It is therefore very

important to pay the correct minimum rates both to ensure that the business does not

incur such a large and unexpected bill and to protect your reputation. 

Care should be taken that the employee is paid for all of their working time. Are the time keeping records correct? There is a legal obligation to retain records of time worked for at least two years. There should be no unpaid time; if an employee may be required for example to travel in the course of their work they should be paid for the time spent travelling.