It's National Minimum Wage time– Understand your responsibility

6 years ago

Neilson WattsPost by Neilson Watts, Associate Product Manager for Sage One & resident Payroll guru!

As we move into autumn, with its dark nights and the need to wrap up warm, you might be thinking “what should I do with my time”?  Well, if you’ve got a quick 5 or 10 minutes, it’s worthwhile reading about National Minimum Wage and how it impacts your business… it might just save you some stress and worry!

 

Each year on the 1st October, the National Minimum Wage (NMW) rates change and this is just around the corner. You need to make sure you are prepared!

National Minimum Wage – did you know?

If you employ someone between the ages of 16 and 20 regardless of the size of your business, whether the employee is full or part time, paid weekly or monthly then it’s likely they are entitled to be paid at least the National Minimum Wage (NMW) and as an employer it’s your responsibility to pay it.

So what happens if you get it wrong?

Any employers not complying with NMW and mistakenly underpaying their employees could be subject to penalties or fines ranging between £100 and £5000 and, in the most serious cases, unlimited fines, so it’s really important that you get it right.

What are the NMW rates from 1st October 2012?

Workers age Rate from 1st October 2012 Rate from 1st October 2011
21 and over £6.19 £6.08
18 to 20 £4.98 £4.98
16 and 17 £3.68 £3.68
The apprentice rate* £2.65 £2.60

*Note: For apprentices under 19 or 19 or over and in the first year of their apprenticeship.  Once an apprentice is aged 19 and in at least the second year of their apprenticeship, they are entitled to the relevant national minimum wage rate.

So what happens if I have a pay period that overlaps 1st October 2012?

If you have a pay period that overlaps the 1st October then you should use the 1st October 2011 rates, then next pay period will then start to use the new 1st October 2012 rates.

What if my employee has signed a contract which is less than the NMW?

Your employee is entitled to NMW regardless of any contract even if they have signed it under their own free will.  The contact would have no legal standing and the employee should still be paid the proper NMW rate.

Where can I find out more information about National Minimum Wage?

You can find out more about the NMW legislation by visiting the Business Link website, www.businesslink.gov.uk/nmw

 

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