National Minimum Wage
The National Minimum Wage was first introduced back on 1st April 1999. The intention was to ensure that full-time workers received a wage that was sufficient to cover the typical cost of living. The rates have been reviewed annually since its creation, reflecting inflation over that time.
In April 2016, the National Living Wage was introduced. This was a slightly higher minimum rate for those 25 and over. Up until that date, all employees over the age of 20 had the same minimum wage rate.
There is also a lower rate for apprentices. This applies to apprentices who are aged under 19 or in the first year of a level 2 or 3 apprenticeship. As employers will typically have to invest a lot more in supervision and training for such employees, this lower rate allows for those additional costs.
The latest change to these rates took place on 1st April 2019. The new rates that apply from that date, together with the previous rates, are shown below.
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
All employers with lower paid employees should review the hourly rates of their employees. The hourly rates will need to be adjusted for any employee whose rate is currently below these new minimums.
Failure to pay these rates can have consequences for employers. Simply not paying the correct amount can result in a penalty of 50% of the underpayment arising. In addition, the following acts are considered a criminal offence with a maximum fine of £5,000
- Failure to keep proper records
- Keeping false records
- Obstructing an enforcement officer or refusing to answer questions of supply information.
The National Minimum Wage requirement does not apply to directors’ salaries, so the amounts paid to directors will not be affected by this change.