Are you paying your staff enough?

Karen’s first job was a paper round. She earned £1.50 per week for tramping around the streets at the crack of dawn in all weathers, posting papers through nasty, snapping letterboxes and trying to avoid nasty, snapping dogs.

OK, so that was a long time ago, and earnings have increased since then.

These days, almost all employees are entitled to earn a minimum amount per hour, by law. As an employer – even if you only have one member of staff ­ – you have to comply with the regulations.

You therefore need to be aware that new regulations come into force from 1 April 2016.

National Living Wage

There are two main changes you need to be aware of:

  • There is now a National Living Wage (NLW) for workers aged 25 or over, meaning you must pay them at least £7.50 per hour.
  • If you underpay the National Minimum Wage (NMW), the penalty is doubled, increasing from 100% to 200% of the arrears due to each worker.

The Regulatory Policy Committee estimates these changes will cost private sector employers an extra £1.1 billion. This sum is made up of £700 million to meet the new NLW, plus £137.5 million to pay additional pensions and National Insurance contributions.

It is planned to increase the NLW to 60% of average earnings by 2020, expected to be over £9 per hour.

National Minimum Wage Chart

  • Aged 21 to 24 = £7.05
  • Aged 18 to 20 = £5.60
  • Aged under 18 = £4.05
  • Apprentice = £3.50

If your contract with your employee is for payments below the minimum wage, it’s not legally binding.

Who qualifies?

In order to qualify for the National Minimum Wage, workers must be of school leaving age or over, on the last Friday in June of the school year they turn 16.

Your workers are entitled to be paid minimum wage even if they are part-time, casual labourers, agency workers, homeworkers, apprentices, trainees, on probation, disabled, foreign, or offshore.

Those who don’t qualify include company directors, volunteers, students, family members who live in your home, workers younger than school leaving age, and prisoners.

 

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