If you have employees, you need to be aware that the next increase in the minimum wage comes into force on October 1st. For anyone over 21, the hourly rate rises by 19p to £6.50. For 18 to 20 year old employees the rise is 10p to reach £5.13 an hour. For those in work at the age of 16 or 17, it is 7p, making their minimum wage per hour £3.79, although youngsters only become eligible for this on the last Friday in June of the year in which they become 16.
Now that some form of education is compulsory until the age of 18, 16 and 17 year olds can only be employed if they are also undergoing some part time education or training as well. You might have one or more young people on apprenticeships with you, in which case their minimum hourly wage rises by 5p to £2.73. As your outsourced bookkeepers will know, after apprentices’ first year, the rate remains at this level for those under 19, while those over 19 must receive the same rate as other employees in their age group.
Non-compliance can be Expensive
Failure to comply with these regulations can evoke some hefty penalties, and these become even more severe on October 1st. Where currently the maximum fine that could be imposed is £5,000 per employee, it is set to go up to £20,000, which will add up to a significant total if several workers are involved.
HMRC have powers to investigate employers at any time if they have received a complaint or have reasons to suspect non-compliance. They can request pay records for up to the previous three years.
Make Sure you Comply
You are advised to get your bookkeepers to check the payroll and ensure that all your employee records are up to date, especially those for young people whose rates could have changed on their birthdays. Rules for what can be excluded when calculating the minimum wage can be complicated and many employers have fallen foul of the regulations because they were not known or understood. Outsourced bookkeepers keep up to date on all these aspects, so make sure you discuss the changes with them before the end of the month.
If you discover that anyone has been underpaid, pay the arrears straight away to demonstrate that it was just a mistake and you have acted in good faith. That way, you may be able to avoid the heavy financial penalties that can be imposed where employers deliberately flout the rules.
