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National minimum wage – don’t get caught out!

17th May, 2017

Last week John Lewis announced that it had breached national minimum wage (NMW) regulations – potentially costing the company £36m. Julie Braithwaite, payroll specialist at Nottingham chartered accountants Clayton & Brewill, provides a useful reminder of NMW rates to ensure you don’t fall foul.

Julie Braithwaite Payroll Administrator Clayton & Brewill Nottingham explains the National Minimum Wage The John Lewis story

John Lewis breached the strict NMW timing regulations due to its use of pay averaging, which spreads worker pay evenly over the course of the year to provide its partners (John Lewis refers to its employees as partners) with a steady monthly income.

While its contractual rates of pay were never below NMW rates, those on hourly rates had sometimes seen their pay fall below the minimum wage level after working extra hours, technically breaking the rules.

The issue was discovered after a worker raised concerns about their monthly pay following the publication of the firm’s annual results in March.

John Lewis isn’t the only large business to fall foul of the NMW regulations. Firms such as Debenhams and Tesco have also previously been caught out as a result of payroll errors.

These high-profile stories emphasise the importance of ensuring that your business is fully compliant with NMW regulations and show the potential outcome if you fail to comply.

NMW – a reminder

As a reminder, here are the latest hourly NMW rates:

25 and over – £7.50 – known as the National Living Wage

21-24 – £7.05

18-20 – £5.60

Under 18 – £4.05

Apprentices are entitled to an NMW of £3.50 if they’re either:

  • aged 19 and under

OR

  • are aged over 19 and in the first year of their apprenticeship.

Apprentices are entitled for the NMW for their age if they are both:

  • aged 19 or over

AND

  • have completed the first year of their apprenticeship.

It’s also important to note that whilst the NMW rates are based on hourly pay, if you pay your employees an annual salary, by piece or in other ways, it’s important to ensure that you are still paying NMW rates. The GOV.UK national minimum wage calculator can help you work out what you should be paying your employees.

NMW rates change every April, so it’s vital to ensure you are aware of the latest rates to ensure you don’t get caught out.ital

For cost-effective help with your payroll, contact the specialists at Clayton & Brewill. We support SMEs, family businesses, farmers and GPs across Nottinghamshire, Leicestershire and Derbyshire to process their payrolls and make sure they are paying their workers the right amount, at the right time.

 

Call Clayton & Brewill’s Nottingham payroll team on 0115 9503044 or click here to email us.

 

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