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National Minimum Wage Increase

National Minimum Wage Increase

National Minimum Wage Increase

April will see the beginning of changes to NMW rates, as well as who is entitled to what. In his address to the House of Commons on 26 November 2020, the Chancellor Rishi Sunak announced that the Government will be increasing NMW rates in 2021 as normal, and that the age threshold for the National Living Wage (NLW) will be lowered to cover 23-year-olds and above.

The table below highlights this change, showing the current NMW and NLW rates and the upcoming rates that will apply from 1 April 2021:

Age

Current rates

Rates from 1 April 2021

Workers aged 25 and over (NLW)

£8.72 an hour

-

Workers aged 23 and over (NLW)

-

£8.91 an hour

Workers aged 21-24

£8.20 an hour

-

Workers aged 21-22

-

£8.36 an hour

Development rate for workers aged 18-20

£6.45 an hour

£6.56 an hour

Young workers rate for workers aged 16-17

£4.55 an hour

£4.62 an hour

Apprentices under 19, or 19+ but in the first year of the apprenticeship

£4.15 an hour

£4.30 an hour

 

It is crucial that employers pay their staff the correct minimum wage rates. Failure to do so could result in costly and time-consuming tribunal claims. The Government has also relaunched the naming and shaming scheme, after a two-year pause. This may make employers liable to more stringent penalties if they fail to pay the correct minimum wage to their staff. A list of 139 organisations who failed to pay their staff appropriate minimum wage rates was recently published by Government. Business Minister Paul Scully described this move as a wake-up call to “rogue” employers.

This came after a 2016-18 investigation found that a total of £6.7 million was left unpaid to over 95,000 employees by both large and small organisations across the UK. According to the Government, this offence occurred for a number of reasons; low-paid staff were obligated to cover costs of their work uniforms, training, or parking and employers failing to raise staff pay once they were eligible for a higher wage bracket.

Offending employers have been required to make outstanding wage payments to staff based on current minimum wage rates rather than those in place at that time of the underpayment. In addition, they have paid fines of 200% of the unpaid amount to the Government, at a cap of £10,000 per employee. 

It may be easy for the law to be misconstrued when it comes to minimum wage, especially as it changes on a yearly basis. However, it important that employers keep in mind that the onus remains on them to ensure that they are keeping in line with the law, as made clear by the Government.

Content provided by NCB partner - Peninsula Business Services, offering employment experise to our members. 

Full Members can contact Peninsula 24/7 for Employment and Health & Safety Advice and Support. 

https://www.peninsulagrouplimited.com/

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