As an employer, you'll most likely be aware that non-compliance with National Minimum Wage (NMW) or the National Living Wage (NLW) can result in an expensive penalty and some unwanted public shaming. The key areas that employers must pay attention to are deductions, unpaid working time, and failure to pay the right apprentice rate.
"Deductions can be a real problem area!"
Undoubtedly, your organisation should not be deducting costs for things like food, training courses, uniforms, and childcare from an employee's wages. You can, however, make deductions up to the NMW/NLW for accommodation, goods or services, provided the cost is not connected with the employment or required by the contract.
It's important to remember that if your employees are required to be present and do something for the organisation, then they should be paid for the working time. This can include arriving at the workplace before their shift, taking care of admin duties post-shift, or even waiting in the workplace before the shift commences.
Employers should also always bear in mind the cost of overtime and the effect that delayed payments can have on pay rates!
Ensuring the correct apprentice rate is paid is another area which can lead to NMW/NLW breaches. The apprentice rate of £5.28 applies to all apprentices in their first year, and those under 19 after that.
After this, they should be paid the NMW rate for their age. It's important to keep an eye on any apprentices' birthdays, qualification completion and any changes in the apprenticeship scheme.
I think now is a perfect time for employers to review their pay practices.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about ensuring you're paying the National Minimum Wage, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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