Avoid the National Living Wage requirements risk

Payroll compliance is coming into sharper focus with the implementation of new National Minimum Wage (NMW) and National Living Wage (NLW) rates, says HWB’s Director David Brookes.

It is against the law for employers to pay workers less than the NMW or NLW and the government recently underlined its commitment to robust enforcement. In total, 179 employers were fined £1.3m by the government for underpaying their staff and more companies may be “named and shamed” in proceeding investigations. The maximum fine for non-payment will be £20,000 per worker and employers who fail to pay could be banned from being a company director for up to 15 years.

New rates for National living wage

The new rates for all workers were introduced on 6 April and will affect at least 2m employees across the UK. The National Minimum Wage is the minimum pay per hour most workers under the age of 25 are entitled to by law. The National Living Wage is the minimum pay per hour most workers aged 25 and over are entitled to by law. The current rates are as follows:

• £7.83 per hour for ages 25 and over.
• £7.38 per hour for ages 21 to 24.
• £5.90 per hour for ages 18 to 20.
• £4.20 per hour for school leaving age to 17.
• £3.70 per hour for apprentices.

The onus falls on the employer to ensure their payroll function is adjusted accordingly and businesses should review their compliance processes, says David.

“The recent enforcement by the government has sent a warning to businesses that non-compliance will face serious consequences,” he says.

“The potential damage is not only financial, but also reputational, so it is more important than ever that organisations of all sizes are on top of their duties as an employer. A key aspect of the compliance requirements is around good record-keeping to ensure that you can demonstrate the NMW or NLW has been paid.

“In the midst of managing a busy organisation, many business leaders may find these responsibilities confusing and an administrative burden.

“With the goalposts likely to change again, now is the ideal time to review whether your HR and payroll function could be run more efficiently.”

For more information and advice on the National living wage for owner managed businesses, call David Brookes on 023 8046 1216 or email david.brookes@hwb-accountants.com