Written by Jack SImpson
Published on June 6, 2016

In a fast-changing legislative landscape, it is easy to lose track of your legal requirements as an employer. At Dataplan, it is our job to keep fully up-to-date with all aspects of payroll law as it evolves, so that our customers are always clued-up as to their legal duties.

One such duty is payment of the National Minimum Wage, the rates of which rise again this October.

These increases will be as follows:

  • The rate for adults (those aged 21 to 24) will go up from £6.70 to £6.95.
  • For 18 to 20 year olds, there’ll be a spike from £5.30 to £5.55.
  • For 16 to 17 year olds, the rate changes from £3.87 to £4.00 (please note that this does not apply to 16 year olds still at school, who are not entitled to the National Minimum Wage).
  • The apprentice rate, meanwhile, will go from £3.30 to £3.40.
  • And for employees aged 25 and over, the National Living Wage rate of £7.20 per hour kicks in

Remember – it is a criminal offence to pay a member of staff less than the National Minimum Wage, or to create false payment records. A finding by HMRC that an employer has paid less than the NMW will result in a penalty, with arrears having to be paid to the employee immediately. This runs alongside HMRC’s public naming of those in breach of the law. All of this makes it really important for employers that the correct rates are paid.

There are certain categories of employee that aren’t entitled to the NMW, a non-exhaustive list of which is given below:

  • Self-employed people
  • Company directors
  • Voluntary workers
  • Workers on a government employment programme, e.g. the Work Programme
  • Members of the armed forces
  • Higher and further education students on a work placement of up to a year
  • Prisoners

For further information on those employees exempt from the NMW, full guidance is available at https://www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage.

It is worth adding that, together with the NMW, employers are duty bound to pay the National Living Wage to staff members aged 25 or over, which has stood at a rate of £7.20 since its introduction in April. The National Living Wage has effectively replaced the Minimum Wage for adults aged 25 or over, with the same penalties for non-compliance and the same exemptions.