There are many updates employers need to keep on top of – and minimum wage rates are just one of them.
Failure to pay staff the correct rates is illegal and will result in claims to the employment tribunal. Not only that, it could land you on the Government’s name and shame list of companies found to be paying less than minimum wage.
April is always a month of change. Every year, the national minimum wage and other statutory rates increase, so it should be an important month in any business owner’s calendar. This year the National Living Wage and National Minimum Rates increased to:
- Workers aged 23 and over: £10.42 per hour (up from £9.50)
- Workers aged 21-22: £10.18 per hour (up from £9.18)
- For 18–20-year-olds: £7.49 per hour (up from £6.83)
- Those over compulsory school age but not yet 18: £5.28 per hour (up from £4.81)
- Apprentices who are under 19, or 19 or over but in the first year of their apprenticeship: £5.28 per hour (up from £4.30)
When does this change take effect?
You could be forgiven for thinking that all employers will need to start paying these rates with effect from 1 April. In actuality, employers must start applying the new rates in the first pay reference period that starts on or after this date.
Pay reference periods refer to the way someone is paid, for example, it could be weekly, every 10 days, or every month.
Rachael Knappier, Director of Service at Croner, says:
“The new rates may come into effect on 1 April but it’s a common misconception that all employers must start paying them from then. Whilst this will be the case for those employers whose pay reference period starts on the first of the month, many employers will instead have pay reference periods starting later or at the end of the month. In these instances, the new rates don’t apply until that date.
“Another question we’re commonly asked is what happens when employees fall into another wage banding on their birthday. This is a similar situation.
“National minimum wage bandings are set by age, so if you’ve got an employee who will be turning 18, 21 or 23, then their rate of pay will move to a higher banding. You don’t actually have to start paying the increased rate from the date of their birthday, however, but from the start of the pay reference period following their birthday, providing it doesn’t fall at the start of the new pay reference period.
“For example, let’s say your pay reference period starts on the 15th of each month and you have an employee who turns 23 on the 25th March. You can continue to pay them the £10.18 per hour rate (for workers aged 21 and 22) until 15th April, at which point they would be entitled to the National Living Wage which is £10.42 per hour.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.