Olivia Bailey, Solicitor at Napthens, outlines the new rates and what employers should be doing before 1 April 2023.
Each year the National Minimum Wage (‘NMW’) and National Living Wage (‘NLW’) rates are changed by the Government.
In January 2023, the Chancellor, Jeremy Hunt, confirmed that the new rates below will come into effect from 1 April 2023:
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The key step is for employers to undertake salary reviews in readiness for the new NMW and NLW from 1 April 2023. It’s important to consider not just those employees currently paid at the NMW and NLW, but those who are also paid just above these rates, to ensure that they will not fall below once the new rates come into effect.
Where appropriate, salary increases in line with the new rates should be confirmed to employees in writing.
Whilst the changes should be straightforward, each year many employers get things wrong and can be found to have paid less than the NMW/NLW. When this happens, they can be listed on the Government’s National Minimum Wage Naming Scheme (with details including the business name, registered address, sector, number of employees underpaid and the total amount in underpayments). When businesses are listed, this can be extremely damaging to the employer’s reputation and can cause lasting problems when trying to attract new talent.
As well as this, if an employer does breach NMW/NLW obligations, then they will be required to pay their affected employees in arrears at the current rates, as well as paying potentially costly penalties to HMRC.
Therefore, it’s important that employers are aware of key issues and deductions which can result in NMW/NLW underpayments, including:
- Failure to pay a worker for any time during their shift when they are at the workplace and are required to be available to work, even if no work is being provided at that time during their shift
- Failure to pay a worker for any travelling time or time spent carrying out training. However, please note that travel time does not need to be paid if an individual is travelling to and from their principal place of work, i.e. commuting to and from home, unless this is offered as a contractual entitlement (although this will be rare)
- Making a wage deduction or taking payments from workers for items or expenses that are connected with the job, e.g. uniform or parking costs
- Failing to pay the correct rate for apprentices, e.g. when an individual is incorrectly classified as an apprentice; or
- Failing to increase an individual’s pay when they become eligible for a new minimum wage rate following a birthday
That said, there are some instances when an employer can deduct sums from an employee’s pay which won’t take this below NMW/NLW requirements. However, we would advise legal advice is sought prior to making any deductions from an individual’s salary.
*All information is correct at the time of publishing. Use of this material is subject to your acceptance of our terms and conditions.
If you have any queries or in need of specific advice in relation to any Employment law query, please contact a member of the Napthens Employment team who are able to offer 30 minutes of free advice to QCS members.