The National Minimum Wage and The National Living Wage Increases – April 2021

In November 2020, the Government announced that the National Living Wage (NLW) and the National Minimum Wage (NMW) increased rates will come into force from April 2021.

What is the difference between NMW and NLW?

Well, NMW is what almost all employees are entitled to. NLW applies to anyone 25 and over unless stated otherwise.

It does not matter how small a business is, they still have to pay the correct minimum wage.

https://www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage

What will the increase be in April 2021?

The NLW will increase by 2.2 per cent from £8.72 to £8.91 and for the first time be extended to 23- and 24-year-olds. The increase will mean that low-paid employees’ income will raise broadly in line with the predicted wage growth.

Full list of increases for April 2021:

• National Living Wage (23+) to increase from £8.72 to £8.91
• National Minimum Wage (21-22) to increase from £8.20 to £8.36
• National Minimum Wage (18-20) to increase £6.45 to £6.56
• National Minimum Wage (under 18) to increase £4.55 to £4.62
• *Apprenticeship Wage to increase from £4.15 to £4.30

Apprentice rates will be:

Aged 16 to 18

• The National Minimum Wage for an apprentice will be £4.30 per hour.

Aged 19 or over and in their first year

• The National Minimum Wage for an apprentice will be £4.30 per hour.

Aged 19 or over and have completed their first year

• Apprentices will be entitled to the National Minimum Wage for their age.

https://businesswales.gov.wales/news-and-blogs/news/national-living-wage-and-national-minimum-wage-rates-2021

What is the Pay Reference period?

The Pay Reference period is the period that you pay your employees for, for the purpose of NMW the pay reference period cannot be longer than one month. If you pay an employee in intervals more than a month apart, as an employer you need to ensure your employee receives NMW during each month.

Below are some examples of A Pay Reference period which shows the period of time the employee should be paid:

• If your employees are paid daily the pay reference period is One day
• If your employees are paid weekly the pay reference period is One week
• If your employees are paid monthly the pay reference period is One month

https://www.acas.org.uk/national-minimum-wage-entitlement/when-your-rate-increases#payreferenceperiod

Did you know?

With reference to The National Minimum Wage Act 1998 a qualifying employee who is paid less then NMW for any pay reference period is legally entitled to be paid in arrears by their employer (section 17 of the 1998 Act).

If HMRC finds an employer has not been paying at least NMW to their employees, HMRC can also take employers to civil court. The maximum payment for not paying NMW is £20,000 per employee.

In some cases, if employees feel they are being paid below NMW or NLW, employers can be taken to an employment tribunal or civil court by the employee.

HMRC also have the right to name and shame employers for paying below NMW or NLW.

https://www.acas.org.uk/national-minimum-wage-entitlement/if-an-employer-does-not-pay-minimum-wage

How we can help you

We can support you in implementing these changes into your business, by ensuring you have the correct contracts in place and advise you on the Legislation. We are here to guide, support and provide you with assistance during this process. We are more than happy to discuss your needs further and offer you a free and no obligation consultation.

You can speak to a member of the team on 01254 467 156 or email us at [email protected]

Why not book directly into our calendars for a FREE Consultation or just some FREE advice, you can do it here: https://calendly.com/hr-andyou/15min

Author: Sophie Baker