We have all been hearing a lot recently about the new National Living Wage, becoming law as from the 1st April 2016. But what is it and are you, as employer, affected?
If your business employs workers, who are at least a school leaving age then yes, this legislation affects you. All workers are covered, regardless of whether they are full time, part time, temporary, casual, probationary, apprentices, trainees, disabled, agency, pieceworkers, foreign, agriculture, seafarers, offshore workers. All employers, regardless of size need to comply.
The National Living Wage covers workers of 25 years of age and older (but not in the first year of apprenticeship) and currently (from 01/04/16) stands at £7.20 per hour.
If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.
Workers under the age of 25 are also covered by the National Minimum Wage, which came in force on the 01/10/2015. Current hourly rates are:
Apprentice: £3.30
Under 18s: £3.87
18 to 20 year olds: £5.30
21 and over: £6.70
Who is not entitled to National Minimum Wage? Anyone who is Self-employed, Company Director or a Volunteer is not affected .
The Government has provided a National Minimum Wage calculator: https://www.gov.uk/am-i-getting-minimum-wage/ so you can check whether you are paying at the right rates.
Employers and employees can also call the ACAS Helpline on: 0300 123 1100 for further information.
Record Keeping
As ever, you, as an employer have to keep records for at least 6 years, which is the maximum amount of time a claim can be submitted to Court. The records keeping requirement covers payroll records, calculations of numbers of hours worked (timesheets, clock cards, electronic records) and any deductions made.
What do you, as employer, need to do?
Check the age of your workers
Inform your staff of the changes
Update payroll records
What happens in case of non-compliance?
If you have underpaid your workers you need to pay any arrears due immediately. It’s a criminal offence for employers not to pay someone the National Minimum Wage or to falsify payment records. HMRC will also enforce penalties, and, in future, “name and shame” non-compliant employers by making the records available to the public, where the business’ customers, suppliers and potential employees can view it. So now is the time to review those employment contracts and amounts paid to ensure you stay within the law!
Please contact us for further advice. At S P Accountancy we offer a fully HMRC compliant payroll software to ensure your employees are paid the right amounts and your business stays within the law.
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