MINIMUM WAGE CHANGES FROM 1 APRIL (this year and last)
This update covers changes to national minimum wage for pay periods starting on or after 1 April 2021, and belatedly reports on some general changes in April 2020. It follows on from update 2105, sent on 22 March, about the supreme court’s recent judgment on minimum wage for workers on sleep-in shifts.
For pay reference periods starting on or after 1 April 2021 there are as usual changes to rates for national minimum wage (NMW) and national living rage (NLW). Very importantly, the age for national living wage is lowered from 23 to 25.
For pay periods starting on or after 1 April, the hourly rates for NMW and NLW are:
- NLW for workers aged 23 and over: £8.91 (2.2% increase from £8.72).
- NMW for workers aged 21 to 22: £8.36 (2% increase from £8.20).
- NMW for workers aged 18 to 20: £6.56 (1.7% increase from £6.45).
- NMW for workers aged under 18 but above school leaving age and are not apprentices: £4.62 (1.5% increase from £4.55).
- NMW for apprentices aged under 19, or 19 or over and in the first year of their apprenticeship: £4.30 (3.6% increase from £4.15).
National living wage is a tier of the national minimum wage, so the terms minimum wage, national minimum wage and NMW generally refer to both minimum wage and living wage.
For pay periods starting on or after 1 April, the accommodation offset rate is £8.36 per day / £58.52 per week, a 1.9% increase from £8.20 per day / £57.40 per week. Unlike nearly all other employer benefits in kind such as food and car, accommodation provided by an employer, up to the accommodation offset rate, can be taken into account when calculating national minimum wage.
Naming and sharing
In 2018 HMRC temporarily stopped naming and shaming companies who did not pay national minimum wage, and carried out a review of the naming scheme. This led to an increase in the minimum arrears threshold for naming employers, from £100 to £500, which took effect from 6 April 2020. and also made some rules easier for calculating minimum wage. The naming and shaming lists resumed in December 2020, when 139 employers – owing a total of £6.7 million to their workers – were named and shamed. I could only find one charity or other voluntary organisation on the list this time, Amber Valley Council for Voluntary Services, for failing to pay £37,346 to 104 workers.
When employers end up being named and shamed by HMRC for failure to pay minimum wage it is often (well, sometimes) not because they deliberately don’t pay the right amount, but because they have failed to increase pay after minimum wage rates go up in April, or following a birthday which takes the worker into a higher pay bracket, or because they don’t realise the potential impact on minimum wage of requiring low-paid workers to pay for uniforms, training, parking fees or other employment-related costs.
Salaried workers
Prior to April 2020, only workers who were paid an annual salary in equal weekly or monthly instalments, for a set basic numbers of hours each year, could be classed as “salaried workers” for the purposes of national minimum wage. To permit more choice and flexibility for employers and workers, the rules on salaried workers changed on 6 April 2020 (sorry I didn’t report it back then).
Additional payment cycles, including fortnightly and four-weekly cycles, are now permitted for salaried workers, for example those working in retail. Employers can choose the “calculation year” for their workers, making it easier to monitor the hours worked by salaried workers and identify potential underpayment of national minimum wage. In addition, salaried workers can now receive premium pay, for example working on bank holidays, without losing their entitlement to equal instalments in pay. Information about these changes is in Calculating the minimum wage, under Resources below.
Salary sacrifice schemes
Some employers offer salary sacrifice or deduction schemes, where workers receive benefits or buy products from the employer and pay for these via deductions from their salary. Deductions made under such schemes must not bring the worker’s pay below minimum wage. If pay does go minimum wage the employer must make up the arrears, but since 6 April 2020, the employer is no longer subject to financial penalties for breaching minimum wage. The waiver is subject to strict criteria, including that the worker has opted into the scheme. Deductions for uniforms and other items connected with the worker’s employment are still penalised if pay after the deduction is below minimum wage.
Real living wage
The national living wage (NLW) should not be confused with the “real” living wage promoted by the Living Wage Foundation, which is not compulsory. The 2021 “real” hourly living wage, announced in November 2020, is £10.85 in London (increased from £10.75) and £9.50 in the rest of the UK (increased from £9.30). Living wage employers are expected to start paying the new rates by 1 May 2021.
Resources
Always be sure you have the most recent version of Gov.uk publications.
- The national minimum wage and living wage. Basic information: who is and is not entitled to minimum wage, what employers must do, and disputes. Includes links to minimum wage calculators for workers and employers. HMRC, on Gov.uk.
https://www.gov.uk/national-minimum-wage
- Calculating the minimum wage. Detailed guidance on eligibility, calculating the minimum wage, working hours for which the minimum wage has to be paid, and enforcing the minimum wage. HMRC, on Gov.uk.
- Salary sacrifice for employers. HMRC, on Gov.uk.
- Pay and work rights helpline and complaints. Provides information on employment rights and responsibilities; pay and the national minimum wage; discipline and grievance; contracts and terms and conditions; working time, rest breaks and holiday entitlement; equality in the workplace; working for an employment agency or gangmaster; and agricultural workers’ rights, with a free translation service for more than 100 languages. Plus a complaints procedure. Acas, on Gov.uk or tel 0300 123 1100.
https://www.gov.uk/pay-and-work-rights
- The real living wage. See my update 2020 of 9 November 2020 (contact me if you would like a copy), or contact The Living Wage Foundation.