BY HANNAH-JANE DOBBIE , REGIONAL HR MANAGER & HR CONSULTANT
BRITAIN HAS JUST HAD A PAYRISE . NOT ONLY HAS THE INCOME TAX THRESHOLD INCREASED TO £ 11,500 , BUT THANKS TO AN ANNUAL GOVERNMENT REVIEW , FROM 1 APRIL 2017 THE NATIONAL MINIMUM WAGE AND THE NATIONAL LIVING WAGE HAVE INCREASED . BUT , EMPLOYERS BEWARE – THE GOVERNMENT IS CLAMPING DOWN HARD ON THOSE OF YOU WHO ARE NOT PAYING THE RIGHT WAGE , AS THEY RECEIVE REAL TIME INFORMATION FROM EMPLOYERS ’ PAYROLLS .
Both the Living Wage and the Minimum Wage are legal requirements , but they are quite different .
The NMW was brought into force through the National Minimum Wage Act 1998 and was put in place to enforce minimum rates of pay . The minimum NMW hourly rate varies depending on an employee ’ s age and whether or not they are an apprentice . The NMW is paid to workers over school leaving age ( 18 ).
The National Living Wage ( NLW ) by contrast is only paid to workers who are aged 25 or over . The NLW differs from the NMW in that it is set by the Living Wage Foundation rather than the government and it is on the cost of living – so in London the NLW is slightly higher than in the rest of the UK .
Both are reviewed annually by the Low Pay Commission .
Previously , the NMW was reviewed every October . Now , both NMW and NLW are aligned and reviewed each April . Any increases need to be applied in the first pay period that starts on or after 1 April so you no longer have to have split weeks / months if 1 April falls in the middle of a pay period .
As of 1 April 2017 the NMW hourly rates of pay will be :
• Apprentice - £ 3.50
• Under 18 - £ 4.05
• 18-20 year olds - £ 5.60
• 21- 24 years olds - £ 7.05
• 25 and over - £ 7.50
There are a couple of exemptions – but employers are urged to do their research , or seek some advice from those in the know before making assumptions as to whom is exempt from receiving either the NMW or the NLW .
If you contract somebody who is selfemployed , or they are a family member living in your home with you , then they are not entitled to the NMW or the NLW . Similarly , workers who are company directors , volunteers or below school age are not entitled , and there are also some stipulations for certain non-family members that live in the employer ’ s home , such as an au pair .
The Government takes correct wage payment very seriously . This was highlighted by publicity aired earlier this year , stating that some 15,500 workers had to be back-paid around £ 1 million due to their employers failing to pay them the NMW or NLW . A total of 360 employers were recently ( and publically ) named and shamed – a record number and all-time high . But that may represent just the tip of the iceberg : The Office for National Statistics has calculated that 362,000 jobs did not pay the NMW in April 2016 . Ignorance is no excuse and if you are found out you could , as well as facing a heavy fine , face negative publicity which in turn could affect the overall reputation of your business .
Employers are legally required to keep records to prove they have paid the NMW ( most use payroll records ) for a minimum of 3 years . HMRC officers have the right to carry out checks at any time , and any infringement will require immediate rectification .
The rise in NMW and NLW could make quite a difference to low income families and hopefully the additional spare cash following the rise in income tax threshold will also lend a hand . Increases in personal allowance come into effect from 6 April 2017 and is the amount you are allowed to earn before you pay income tax . In the year 2016 / 2017 the amount was £ 11,000 , but it will now increase to £ 11,500 . At the recent Budget announcement , the Chancellor , Philip Hammond , pledged that the Government is still on track to raise this even further to £ 12,500 by the end of the current parliament in 2020 .
You can find out more at www . gov . uk / national-minimum-wage or you can contact your local Wilkins Kennedy payroll representative at one of our Kent-based offices in Ashford , Canterbury , Maidstone , Orpington and Sandwich .