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It’s that time of year again, it’s good news for minimum wage workers as wages are going up in April. As an employer how confident are you that you are getting it right?


The National Living Wage is increasing from £7.83 to £8.21 per hour. The changes are anticipated to impact 2.4 million workers (yay for them!) increasing an average living wage worker’s annual salary by £690 per year. For employers this means including employer’s national insurance and pension contributions an additional cost of £805.92 per year (less yay for them!).

National Minimum Wage will also be increasing;

• 21 – 24-year old’s £7.70 per hour
• 18 – 20-year old’s £6.15 per hour
• 16 – 17-year old’s £4.35 per hour
• Apprentice rate £3.90 per hour


So, who is entitled to minimum wage/living wage…

Entitled Workers;

• Part-time, full-time, casual and agency workers.
• Trainees and workers on probation.
• Disabled workers.
• Foreign workers.
• Offshore workers (within 12 miles of the continental shelf).

Not Entitled Workers;

• Self-employed and company directors.
• Volunteers.
• Workers on government employment programme and pre-apprenticeship schemes.
• Members of the armed forces.
• Family members of employer living in employers’ home.
• Higher and further education students on a placement of up to 1 year.
• People working on a Jobcentre Plus Work trial for 6 weeks.
• Agricultural workers (they have their own rules).

Calculating Minimum Wage/Living Wage…

To ensure you as an employer are compliant it is important to know which deductions are included in minimum wage calculations and which aren’t;

Counts towards minimum wage;

• Business travel time
• Training
• Incentive payments
• Bonuses (but be careful of annual allocations!)

Doesn’t count towards minimum wage;

• Loans
• Advanced wages
• Pension payments
• Rewards under staff suggestions
• Redundancy payments
• Lump sum retirement payments
• Tips
• Overtime and shift premiums


Why do we care? Firstly, if your employees find out they’re not being paid correctly, they will leave! And if that doesn’t prompt you into action, HMRC have announced they are spending £26.3 million on national minimum wage compliance this year alone.

If an employer fails to pay workers national minimum/living wage and the issue is not resolved, they can receive fines of up to £20,000 per worker, chances are most employers can’t afford this, so it is worth keeping your employees happy and keeping the fines at bay by getting it right! Employers can also be banned from being a company director for up to 15 years.

Payroll Penny’s employer tips for NMW/NLW;

• Ensure all employee data is correct. Inaccurate data such as employee D.O.B can lead to under payment of minimum wage.
• Run regular minimum wage checks, all payroll software’s should be able to run off a minimum wage report which will flag any underpayments that have been made, allowing them to be corrected.
• Don’t shy away from mistakes. If you are not honest about an underpayment of minimum wage, and an employee discovers the underpayment, payment can be back dated. Please note if rates are different, back dated payment must be paid using current NMW rates not rates at the time employee was underpaid, under the circumstance that the new NMW rate is lower, employee must be paid original rate.

In an effort to help employee’s check they are on the correct rate 2019 is also due to see a change in the detail given on payslips… click here to read more!