National Minimum, National Living and Living – 2017 wage changes explained

It can often be difficult to keep up with governmental changes to age specific minimum wages, especially for large organisations. As of April 2017, the UK expects to see yet another increase in minimum pay for employees, amidst economical changes and an attempt to reinstate a higher quality of life for residents of the UK. We have identified three wages, provided a description and listed the current and expected rates for April 2017:

National Minimum Wage (NMW)

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker's age and if they are an apprentice.

Key points:

• Most workers over the school leaving age will be entitled to NMW
• The NMW rate is reviewed annually by the Low Pay Commission
• HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW
• There are a number of exemptions to those who receive the NMW. These do not relate to the size of the business, sector, job or region.

Rates of pay: 

Non-payment of the NMW:

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records.

If an employer doesn't pay the correct rate, a worker should talk to their employer and try to resolve the issue informally first. If this doesn't work a worker may make a formal grievance to their employer.

A worker can make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn't paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to the worker.

Exemptions:

There are a number of people who are not entitled to the NMW:

• Self-employed people.
• Volunteers or voluntary workers.
• Company directors.
• Family members or people who live in the family home of the employer, who undertakes household tasks.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

National Living Wage (NLW)

The Government's National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is currently set at £7.20 per hour. In April 2017 it will go up to £7.50. The current National Minimum Wage for those under the age of 25 still applies.

Key points:

• The NLW rate is reviewed annually by the Low Pay Commission
• HM Revenue & Customs (HRMC) can take employers to court for not paying the NLW
• There are a number of exemptions to those who receive the NLW. These do not relate to the size of the business, sector, job or region
• The compulsory National Living Wage is the national rate set for people aged 25 and over.

Rates of pay:

Non-payment of the NLW:

With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.

The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

Exemptions:

There are a number of people who are not entitled to the NLW:

• Self-employed people.
• Volunteers or voluntary workers.
• Company directors.
• Family members or people who live in the family home of the employer, who undertakes household tasks.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

Living Wage (Living Wage Foundation)

The Living Wage is an independent movement of businesses, organisations and people who believe a fair day’s work deserves a fair day’s pay. The Living Wage Foundation is an entity formed to provide a ‘more realistic’ living wage that is independently-calculated each year based on what employees and their families need to live.

Key points:

• This rate is NON-COMPULSORY
• The rates apply to all workers over 18 – in recognition that young people face the same living costs as everyone else
• The real Living Wage that meets the cost of living enjoys cross party support, with public backing from successive London Mayors and MPs across the four nations of the UK
• Paying a wage that is enough to live on is good for business, good for the individual and good for society
• The Living Wage Employer Mark and Service Provider Recognition Scheme provide an ethical badge for responsible pay.

Rates of pay:

In addition to the penalties of failing to pay at least the National Minimum Wage to employees, companies will be ‘named and shamed’ on a public list of corporate offenders. To see the full list of 198 employers in 2016, that owed an accumulative sum of £465,291 in arrears, click here.

So, what can Datum RPO do to help?

Amongst other things, Datum RPO takes legal compliance very seriously. Our dedicated team of RPO experts manage your temporary or contractor recruitment needs, as well as ensuring that each individual worker is eligible to work in the UK and paid fairly. Our online software stores information, including rights to work, driving licences, DBS checks, qualifications, health and safety training and tenure in line with Agency Workers Regulations. In addition, we audit all operating agencies to further ensure that the National Minimum/Living wages are met per individual agency worker.

We want to share with you our expert knowledge in procuring and managing temporary and contract agency labour – view and download our latest guides: 

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