National Minimum and National Living Wage Update 2018
Wage rates for all ages including apprentices will be going up on 1st April 2018, including the largest increase in a decade for the rates that apply to 18 to 20 and 21 to 24-year olds. The Low Pay Commission estimates the new rates will boost the earnings of between 260,000 and 360,000 young workers.
National Minimum Wage
The National Minimum Wage is the minimum rate of pay per hour someone is entitled to by law and depends on a worker’s age and if they’re an apprentice.
From 1st April 2018, the following National Minimum Wage rates will be:
- For workers aged 21 to 24, the rate increases from £7.05 to £7.38
- For workers aged 18 to 20, the rate increases from £5.60 to £5.90
- For workers aged 16 and 17, the rate increased from £4.05 to £4.20
- For apprentices under the age of 19 or those aged 19 and over who are in their first year of an apprenticeship, the rate increased from £3.50 to £3.70
- Accommodation offset increased from £6.40 to £7.00
The National Living Wage
The Government’s National Living Wage affects all workers aged 25 and over. From 1st April 2018, the rate will increase from £7.50 to £7.83 per hour.
In any given pay period a worker’s pay must not fall below the Minimum and Living Wage rates. An employer who fails to ensure this could be faced with financial penalties and may be named and shamed in a government press release. We have seen examples of well-known employers hitting the headlines for paying below the Minimum and Living Wage rates*; so ahead of the increases in April, it is worth checking your payroll process and consider the main common payroll related mistakes that should be avoided:
- Tips and gratuities shouldn’t be included when calculating minimum wage pay rates for employees
- Making wage deductions for items or expenses that relate to the job such as uniforms will reduce a worker’s pay for minimum wage purposes
- Deducting administration fees for earnings orders such as child support and council tax will also reduce a worker’s pay for minimum wage purposes
- Failing to apply the correct rate of pay for apprentices in their second year
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