National Minimum Wage: Common traps
The top three mistakes made by employers concerning the National Minimum Wage (NMW) rates are:
- Making deductions from wages (such as uniform or expenses) which take the pay below the NMW rate;
- Failing to pay workers for all the time they work, including overtime;
- Paying the incorrect rate to apprentices.
If you fail to pay the correct NMW rate and the underpayment is £500 or more across your payroll, your business details may be included on the list of named employers published on gov.uk.
You would also have to pay the underpaid wages to the employees and a penalty of 200% of the unpaid wages. If all of the underpayment of wages is paid within 14 days, the penalty is reduced by 50%.
The pay for apprentices is easy to get wrong, as the NMW apprenticeship rate of £4.30 per hour only applies during the first year of the apprenticeship, or if the apprentice is aged under 19. Otherwise, the wage rate must be the appropriate level for the worker’s age, as shown below
|23 and over||£8.91|
|21 to 22||£8.36|
|18 to 20||£6.56|
You need to be very clear as to exactly when each of your apprenticeship contracts started and how old each young worker is.
Remember that the highest rate of NMW now applies to workers who are aged 23 and over, not 25 and over, as was the case before 1 April 2021.
We can help you check that the correct wage rate is paid to each of your workers.