Do you know when your younger workers will reach their key birthdays: 18 and 21?
It is essential to know exactly when these dates fall, as reaching such a milestone will change the level of national minimum wage (NMW) which must be paid to that worker. The current and proposed NMW hourly rates are:
|Age or status of employee||From 1 October 2014||From 1 October 2015|
|21 and over||£6.50||£6.70|
|18 to 20||£5.13||£5.30|
|Under age 18||£3.79||£3.87|
|Apprentices under 19 or in 1st year||£2.73||£3.30|
An employee’s pay must be increased from the beginning of the pay period that starts on or after the date the NMW rate changes, either because all the NMW rates have changed (on 1 October each year), or because the employee has moved into a different rate band due to their age or status (apprentice). A pay period is the normal period for which the employee is paid – be that weekly or monthly.
Failure to pay the NMW is a criminal offence, as is falsifying payment records regarding the NMW.
The maximum financial penalty for NMW underpayments is £20,000 per employer, but will soon change to £20,000 per employee. If HMRC find out that your business has not paid the right amount of NMW, it will be publically named, even if the amounts underpaid are very small for each worker.
You need to keep a close eye on when employees turn 21 for NIC purposes. From 6 April 2015 the wages of up to £815 per week paid to workers aged under 21 attract a zero rate of employers’ class 1 NIC. Once the employee reaches 21 the normal NIC rates apply.