With the National Minimum Wage (NMW) and National Living Wage (NLW) rates due to increase significantly from 1 April 2022, employers should ensure that they are operating within the rules and ready to accommodate the higher rates of pay.

In December 2021, the Department for Business, Energy & Industrial Strategy (BEIS) issued the latest list of employers who had failed to pay their employees the NMW; a timely reminder that there are adverse consequences associated with breaching the law, and that paying your employees correctly is not optional.

Besides being publicly named, non-compliant employers also face being investigated by HMRC and fines worth up to 200% of the wages owed to employees. If found to be at fault, employers must also pay over any monies owed to staff accordingly.

The most recent ‘name and shame’ list confirmed that 208 businesses had neglected their legal duties to pay employees the appropriate minimum wage rate but, notably, no one ‘type’ of business was identified as being more culpable than another.

An array of businesses were represented on the list including sole traders, high street brands, multinational organisations, SMEs and even a County Council.

The truth of the matter is, some employers are still getting it wrong, whether intentionally or not, and thousands of workers are left out of pocket as a result.

What are the NMW and NLW rates for 2022-23?

The NMW and NLW rates change on 1 April, annually. The following are the rates for the NLW (for those aged 23 and over) and the NMW (those who are of at least school leaving age), that will apply from 1 April 2022.

If you employ apprentices as part of your workforce, those under the age of 19, or 19+ and in their first year of the apprenticeship, should receive £4.81 from 1 April 2022.

An apprentice aged 19+, and who has completed the first year of their apprenticeship, is entitled to receive the appropriate minimum wage for their age bracket.

 23+ (NLW)21-2218-20Under 18Apprentice
1 April 2021-31 March 2022£8.91£8.36£6.56£4.62£4.30
1 April 2022 onwards£9.50£9.18£6.83£4.81£4.81

Paying the National Minimum Wage – Things to look out for

When it comes to breaches of the rules, there are a number of commonly identified failings and so it would be wise to be mindful of these things when paying your employees.

Deductions from wages

According to the BEIS’ latest report, 37% of underpayments by employers are the result of deductions from wages reducing pay to a level below the legal minimum – for example, childcare costs, or the costs of complying with a dress code.

Guidance clearly states that deductions made for the benefit of the employer will reduce an employee’s rate of pay for NMW purposes. To this end, salary sacrifice arrangements should also be treated with care.

Hours worked but unpaid

Unpaid working time was cited in over a quarter of total failings whereby, for example, time spent traveling or participating in mandatory training was not taken into account, or where time worked before and after the constraints of an individual’s ‘shift’ was unpaid.

Employers should be aware of a salaried worker’s annualised hours, in order to be able to monitor whether basic hours in the year are exceeded and so whether any additional time attracts pay.

Apprentice rates

As aforementioned, there are certain criteria which dictate the rate that an apprentice should be paid. Of the underpayments identified by the BEIS in December 2021, 16% were as a result of apprentices being paid incorrectly by their employers.

In line with the rules as set out above, employers must first be clear about which of their employees are apprentices.

Once identified, employers should record and track the ages of their apprentices and which year of their apprenticeship they are in, at any one time. This information, if kept up to date, should help to ensure that the correct rate of pay is applied.

Not increasing rates of pay in line with legislation, or paying the incorrect rate

Just over 10% of the failings identified were as a result of employers failing to acknowledge Government rises, or paying the wrong rate to the wrong age group.

The Government are clear that there is no excuse for underpaying staff, which is why they continue to issue educational bulletins alongside the ‘name and shame’ list, in a bid to help struggling employers with compliance. The latest can be found here.

How can GH Payscheme help?

Not keeping up to date with legislation, misinterpreting the rules, or making errors when processing payroll can all lead to your employees being short-changed. However, by outsourcing your payroll function to a dedicated team of payroll professionals, these things need not be concerns.

GH Payscheme is a professional payroll bureau, supporting businesses in Bedfordshire, Cambridgeshire, Hertfordshire, and throughout the UK, to get payroll right.

Our outsourced payroll and pay advice services are designed to relieve you of the headache that payroll can sometimes be, and to contribute to the efficient and cost-effective running of your organisation.

We work with you to tailor our payroll services to the needs of your business, and we use the latest technology, in line with ever-changing payroll legislation, so that you remain compliant at all times and can confidently fulfil your legal obligations as an employer.

To find out more about how our payroll team can support you, or to discuss your requirements in more detail, fill in our online enquiry form, or email payroll@ghpayscheme.com.

*Contains public sector information licensed under the Open Government Licence v3.0.

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