From 1 October 2016, the National Minimum Wage (NMW) is increasing and employers need to ensure they are fully compliant with the new rates, which will be in force until 31 March 2017.
The new hourly rates are as follows:
Apprentice Rate – £3.40
16-17 Year Old Rate – £4.00
Youth Development Rate (18-20 year olds) – £5.55
21-24 Year Old Rate – £6.95
The National Living Wage (25 years and over and in place since 1 April 2016) will remain at £7.20 per hour although the Low Pay Commission is due to make recommendations this Autumn on the new rate to be applied from April 2017.
There are penalties for employers who pay below the National Minimum Wage and recent high profile cases have seen HMRC cracking down on those who have paid too little. The government has taken to ‘naming and shaming’ guilty employers as a warning shot to others who fail to pay the correct amounts.
Employers must be careful where employees are in salary sacrifice schemes, such as pension schemes. The amount of salary sacrifice deductions cannot take the employee to below the NMW and so this must be calculated carefully when preparing the payroll.
Note that the National Living Wage is different to the UK Living Wage and the London Living Wage, the latter two being voluntary.
Curo offers a full suite of payroll services and is able to advise on all aspects of payroll issues. To understand how our payroll technicians can help your business, please contact [email protected] or call 01527 558539.