Understanding the ins and outs of the National Minimum Wage (NMW) is crucial for both employers and employees to ensure compliance with the law and to uphold fairness in the workplace. As we move into 2024, significant updates and changes to the NMW rate are set to impact workers aged 21 and over, along with apprentices and those on the cusp of these financial adjustments. In this comprehensive guide, we will demystify the National Minimum Wage, make clear distinctions between it and the National Living Wage, and detail the critical rates to mark on your financial calendar starting April 2024.
Who Gets Minimum Wage?
The National Minimum Wage applies to almost all workers in the United Kingdom, regardless of their employment status.
- School Leaving age, which is the earliest that you can do is when you are 16.
- You must be 21 to be entitled to a National Living Wage
- Foreign workers
- Casual Labourers, like bar staff, shop assistants, workers who are on zero-hour contracts etc.
- Disabled workers
- Agricultural workers
- Seafarers
- Workers who are on probation
- Trainees
- Apprentices, unless the apprentice is aged under 19. If so, an apprentice younger than 19 is entitled to an apprentice rate
National Minimum Wage vs. National Living Wage: Clarifying the Difference
While often used interchangeably, the National Minimum Wage and the National Living Wage cater to different age groups within the workforce.
- The NMW is a mandatory minimum hourly rate set for workers below the age of 23, whereas
- the National Living Wage is an elevated hourly rate applicable to those 23 and older. Recognizing this distinction is the first step in understanding your entitlements or obligations.
How much is NMW in 2024
- If your employee is 21 and over £11.44
- If your employee is aged between 18 and 20 £8.60
- If your employee is under 18 £6.40
- For apprentices £6.40
The Implications of NMW Adjustments
For Employers
Ensuring compliance with the new NMW rates is not just a matter of legal obligation but also one of ethical responsibility towards your workforce. Non-compliance can lead to severe penalties, not to mention damage to your company's reputation and morale. See below;
It’s imperative that payroll systems are updated well in advance of the April 2024 change to reflect the new wage standards.
For Employees
Understanding your rights in relation to the NMW is key to ensuring you’re fairly compensated for your work. If you suspect that you’re being underpaid, it’s important to raise the issue, initially internally within your organization. Should that not yield results, external avenues for recourse, including contacting the HM Revenue and Customs (HMRC), may be pursued.
What Happens If You Pay Below NMW?
If your employee thinks that they`re paid under the National Minimum Wage, they can complain to HMRC anonymously. Complaints can come from the third party as well.
HMRC initiates its investigation with a Notice of Underpayment (NoU), then issues penalties in accordance with the time/date that the concerned employee worked for you.
- If the complainant worked before 6 April 2009, NoU comes with NO PENALTY.
- If the complainant started to work for you between 6 April 2009 and 7 March 2014, NoU includes 50% of the total underpayment, a minimum of £100 and a maximum of £5000 per NoU
- If the complainant started to work for you between 7 March 2014 and 25 May 2015, 100% of the total underpayment and a minimum of £100 and a maximum of £20,000 per NoU.
- If the complainant started to work for you between 26 May 2015 and 31 March 2016, 100% of the total underpayment and a minimum of £100 and a maximum of £20,000 PER WORKER.
- If the complainant started to work for you after 1 April 2016, 200% of the total underpayment and a minimum of £100 per NoU and a maximum of £20,000 PER WORKER
Conclusion
Staying informed about the National Minimum Wage and its updates is crucial for both employers and employees. It is a legal requirement to ensure that workers are fairly compensated for their work, regardless of their age or employment status. Failure to comply with the NMW rates can result in penalties and damage to a company's reputation. Employees should also be aware of their rights and take action if they suspect they are being underpaid. By understanding the distinctions between the National Minimum Wage and the National Living Wage, and staying up-to-date with changes to the rates, both employers and employees can work towards a fair and compliant workplace in 2024 and beyond. Remember, knowledge is power, so be sure to stay informed about your entitlements under the National Minimum Wage. Let's work together towards a more equitable workforce for all. Stay Informed, Stay Compliant.
