Are you prepared for the National Minimum Wage and Living Wage changes?

From 1 April 2019, employers throughout the UK must pay their workers the new statutory National Minimum Wage (NMW) and National Living Wage (NLW). The applicable NMW & and NLW rate will vary depending on the worker’s age.

*only certain apprentices apply

Who is entitled to NMW or NLW?

A worker is entitled to the NMW or NLW if they have a contract of employment or a contract to perform work or provide services to an employer, are not self-employed, and have ceased to be of compulsory school age. This includes part-time workers, casual labourers and agency workers. The employment contract does not need to be in writing; it can be an implied or an oral contract as well.

What counts as NMW or NLW?

How an employer calculates NMW/NLW for workers will depend on the type of work the worker is engaged in. There are four types of work for these purposes:
  • Time work
    Paid according to the number of hours worked;
  • Salaried-hours work
    Paid for a pre-determined number of hours a year and contractually entitled to an annual salary for those hours that is paid in equal installments;
  • Output work
    Paid according to each piece produced or task performed with no fixed hours of work;
  • Unmeasured work
    Paid a set amount for a task or for working a certain length of time, such as a week.

Other changes that will affect your business:

  • Increases in statutory payments and tribunal awards.
  • The standard personal allowance will increase to £12,500 and the higher rate tax threshold to £50,000.
  • Requirement to pay individuals who carry out more than 4 weeks’ work experience the appropriate NMW.
  • The right to an itemised pay statement will extend to workers, not just employees. The payslips of workers and employees paid by the hour must clearly set out the number of hours they have been paid for.
  • Employers with 250 or more employees on the snapshot date (31 March in the public sector and 5 April in the private and voluntary sectors) must report on their percentage gender pay gap annually within 12 months of that date. The first reports are due in 2020.
  • Increased Statutory family pay rates to increase to £148.68 for 2019/2020. This rate will apply to maternity pay, adoption pay, paternity pay, shared parental pay and maternity allowance.

Make sure your business is ready for this year’s changes by April 1 2019 to avoid penalties from HMRC.

To find out more visit gov.uk/national-minimum-wage-rates or to speak to an expert about how we can help your business call 0345 040 0002.