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Changes to the National Minimum and Living Wage

View profile for Chris Amys
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The annual revision to the rates for the National Minimum and Living Wage will come into force this month, in which the following changes will be made:

  1. National Living Wage for workers aged 25 and over increases to £8.72;
  2. National Minimal Wage for workers aged 21-24 increases to £8.20, aged 18-20 increases to £6.45, aged 16-17 increases to £4.55; and the
  3. Apprentice Rate increases from £3.90 to £4.15.

Employers should note the Department for Business, Energy and Industrial Strategy (BEIS) recently estimated over 400,000 workers were paid below the minimum wage in 2019. BEIS also announced enforcement action was successfully pursued on behalf of over 200,000 workers, amounting to approximately £25 million in unpaid wages and £17 million in fines. The Government will shortly re-start its naming and shaming scheme.

Separately to these changes, a number of small, but important and complex changes are also being made to the National Minimum and Living Wage in the form of new Regulations. This is in response to the BEIS consultation on one of the main issues with the National Minimum and Living Wage, namely the ability for employers to comply in relation to technical but unintended breaches.

Under the new Regulations, the following changes will come into force from 6th April 2020:

  1. For salaried-hours workers who receive a premium, that premium will not form part of the employee or worker’s remuneration for National Minimum and Living Wage purposes. Salary premiums could be for working a particular time of the day, at a particular location or working environment or working on a particular task.
  2. In addition, salaried-hours workers, regardless of many hours they work in a particular week, month or any other period, may be paid in equal instalments which are not more often than weekly and not less often than monthly.
  3. Businesses can now choose a calculation year for salaried workers. They can also change the calculation year, on condition they provide the employee or worker with at least 3 months’ written notice.
  4. If an employee or worker has to purchase goods or services from the business, e.g. a Company uniform, this will not amount to a reduction for National Minimum and Living Wage purposes, provided the Company reimburses or intends to reimburse them.

These changes go some way to addressing some of the issues experienced by businesses that unintentionally breach the requirements of the National Minimum and Living Wage. However they do not address the issues employers face with salary sacrifice schemes and other pay deductions.

Please contact us if you require any advice on any of the employment and HR issues referred to above. Please contact Sally Morris on 01905 610410 or at sally.morris@mfgsolicitors.com to discuss any frequently asked questions.

 

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