By Michael Green & Eva Powell
Minimum Wage Changes – are you keeping up?
It is safe to say that most people are aware of the existence of the national minimum wage. Introduced in 1999, it provides the minimum hourly rate which must be paid to adult employees in the UK. But if you dig a little deeper, it is likely that far fewer people would be able to say precisely how much the minimum wage is (without consulting Google!). Would you know, for instance, that the minimum wage varies according to the age of the employee and that the figures increase annually? Many people are unaware of these details, and for employers, this can be a costly mistake.
As an employer, you might believe you are complying with the legislation on minimum wage but it is important to keep up to date with changes; the minimum hourly rates increase year-on-year, and failure to comply can lead to hefty fines that could cripple small businesses.
The next annual increase is set to take effect from 01 October 2014.
The minimum wage is banded to cover employees of different ages. When the latest increase takes effect, the rates will be:
- 16 to 17 years old – minimum hourly rate will rise to £3.79 per hour
- 18 to 20 years old – minimum hourly rates will rise to £5.13 per hour
- 21 years and over – minimum hourly rate will rise to £6.50 per hour
HMRC are responsible for the enforcement of the national minimum wage. They have powers to impose penalties for failure to comply with the rules. These penalties can be up to £20,000 for each worker that is underpaid. In addition to this, the employer will have to make up the shortfall in pay to employees who have been underpaid.
HMRC also have the power to “name and shame” companies who have failed to pay the minimum wage. A business’s reputation can therefore suffer great damage for even minor or accidental infractions.
Keeping up-to-date with changes to the minimum wage legislation is, therefore, vital for employers to protect their business and reputation.
If you need any advice on this, or any other employment matter, get in touch with our Mike Green or Sally-Ann Evans.