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Time for a payrise – with a few changes for 2018

Victoria Chambers

16 March 2018

The Minimum Wage and Living Wage are about to increase, but there’s been a few changes to the way Minimum and Living Wages are paid. There is also an update to the way payments are recorded on payslips to ensure companies are compliant with National Minimum Wage.

New rates you need to know

Minimum Wage increases usually fall in October, with the Living Wage increasing in April, in line with the new tax year. However, those receiving Minimum Wage have had to wait until April 2018 for their payrise. The Government introduced this in 2017 as a way of bringing everything in line with one date.

From April 2018, the National Minimum Wage and Living Wage has increased to the following:

  1. 25 and over £7.83 (from £7.50)
  2. 21 to 24 £7.38 (from £7.05)
  3. 18 to 20 £5.90 (from £5.60)
  4. Under 18 £4.20 (from £4.05)
  5. Apprentice £3.70 (from £3.50)

Apprentices are entitled to the apprentice rate if they are either

  1. aged under 19, or
  2. aged 19 or over, but are in the first year of their apprenticeship.

If the apprentice is aged over 19 and has completed the first year of their apprenticeship, they are entitled to Minimum Wage.

Consequences on non-compliance

Failure to pay Minimum Wage to those entitled could result in a lengthy investigation by HMRC and a fine of up to 200% of the amount of Minimum Wage that is in arrears. The maximum fine is £20,000 per worker and employers could be banned from being a company director for up to 15 years. This is to help clamp down on rogue employers, so that employees can be paid fairly.

Proof of compliance

To help demonstrate compliance by employers, on 7 February 2018 the Government introduced further measures effective for the 2018/19 tax year. Employers now need to state the breakdown of payments on payslips, as opposed to lumps sums. For example 7.5 hours holiday pay at £8, rather than one payment of £60.  This is to ensure that Minimum Wage can be monitored and employees understand how their payments have been calculated and the rates they are being paid at.

The Low Pay Commission has been pressing for the Government to make law surrounding hours worked, stating that these should be included on payslips to ensure easier, and fairer calculation of pay entitlement.

Contracts for payments below the Minimum Wage are not legally binding. It is against the law for employers to pay less than Minimum Wage, so it is advisable that you check with your accountant and/or HMRC.

How can Wilkins Kennedy help?

You can find more information about the National Minimum Wage from www.acas.org.uk but Wilkins Kennedy’s payroll team is also here to help. Contact us today to find out more.

About Victoria Chambers

Victoria Chambers

Victoria joined Wilkins Kennedy in 2013. She is a senior payroll professional who is a member of the Chartered Institute of Payroll Professionals and achieved the foundation degree in payroll management in 2012. Victoria provides expert knowledge to payroll teams on statutory legislation, HMRC guidelines, payroll calculations including PAYE, NI, SMP, SSP, PAYE Settlement Agreements (PSA), aggregated earnings, year end reporting (P35, P14, P60, P11D) etc and terms and conditions of employees in order to complete an accurate and timely payroll.

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