On the 1st of April 2021, we moved into the new national minimum wage (NMW) year, this sees the NMW change to a base rate for an apprentice. This is very important for all employers to know as this is not guidance but law and must be adhered to across all industries.
This covers all apprentices under the age of 19 AND any apprentice, regardless of age, in the first year of their apprenticeship. Once they have completed their first year and if 19 or over they are then entitled to the minimum hourly rate of the National Minimum Wage for their age.
The new National Minimum Wage and Living Wage rates are as follows: April 2021 – March 2022
The UK government specifies what the NMW should be paid by age, sometimes this can cause some confusion but it is your responsibility to ensure that you are paying this at a minimum. If you are unsure then please read the full details on the government website.
Your employees are also encouraged to ensure that they do not accept less than the minimum wage and the government provide a handy calculator to help you calculate this. National Minimum Wage and Living Wage Calculator.
- Who can qualify for NMW?
To qualify, a worker in the United Kingdom must be at least:
- school leaving age (last Friday in June of the school year they turn 16) to get the National Minimum Wage.
- aged 25 or older to get the National Living Wage – the minimum wage will still apply for workers aged 24 and under.
Contracts for payments below the minimum wage are not legally binding, the worker is still entitled to the National Minimum Wage or National Living Wage regardless of any existing employment contract.
- Are your employees entitled to NMW?
Employees are also entitled to the correct minimum wage if:
- “casual labourers”, for example, someone hired for one day
- agency workers
- trainees, and workers on probation
- disabled workers
- agricultural workers
- foreign workers
More details can be found on the government website.
- If you offer accomodation do you still have to pay NMW?
Yes, but as an employer, you are entitled to deduct a set daily/weekly amount from the National Minimum Wage and National Living Wage rates.
Rates that can be charged for accommodation are laid out on the government website.
- Do I pay more for overtime?
No, not necessarily, but you have to pay for the hours worked by your apprentice.
If you remember that you have to calculate the salary based on the hours needed and then clearly state this in the employment contract, anything over and above this has to be paid for at the correct NMW level as a minimum.
It’s a common error when calculating a total salary to base this on standard office hours, depending on the industry you are in this may not reflect the reality of the hours of work actually needed. As an employer, you can choose to pay for a lunch hour, but this needs to be clearly stated in the contract of employment. If an employee’s working day starts at 7am and ends at 5.30pm (with appropriate breaks), for 6 days a week, they must be paid for each of those hours.
For example, if you have calculated a salary based on 9am-5pm Monday-Friday, but the work needed is 9 hours a day for 6 days, you will need to increase the planned salary to cover the hours needed for the role.
If a worker works additional hours over their contract of employment, at your request then you may pay a worker at a higher rate than their standard pay rate, for example for working:
- overtime, weekend or night shifts,
- on bank holidays
- longer than a certain number of hours
- Contracts of employment with your apprentice
Signed apprenticeship agreements/contracts must be in place at the start of any apprenticeship. This agreement confirms the individual employment arrangements between you and your apprentice. Both parties must sign the agreement.
- What is classed as working time?
There are ofter a number of errors made when calculating the NMW for your worker, here are some examples of areas that should be part of the calculated wage.
Travelling time. Travelling in connection with a worker’s job is working time and should be included in minimum wage calculations accordingly. This includes travelling to customers/competitions or training, but not between home and a permanent place of work.
Training time. Time spent on training counts as working time.
Additional time. This can often occur either end of a worker’s shift when they may have to arrive early or stay late, for example, a worker might have to arrive 20 minutes early before their shift starts to get to a competition or customer, or may have to stay behind an additional 20 minutes to wait for a delivery or a farrier to finish, this should be counted as work time.
Down-time at the employers’ disposal. For example ‘on standby’ near the workplace, not working because the office is closed or lorry has broken down breakdown but kept at the workplace, or waiting to work specific delivery.
- What should I do if I am paying the wrong rate?
Put it right – identify any arrears you owe your workers, pay those arrears back to the workers and pay the correct rates going forward.
A failure to act runs the risk that one of your employees, or ex-employees, will report you to HMRC.
You will then be considered for investigation, which can result in penalties of up to £20,000 per underpaid worker. You may also be publicly named and shamed, which could have a significant impact on the reputation of your business.