Minimum Wage For Your Employees

What minimum wage must I pay?

Here at Costboss one of our most important jobs is helping our clients to control their payroll. However, one issue that is outside our control is the statutory minimum wages that must be paid to all employees.

Over the last few years, the National Minimum Wage rates have increased significantly and last April saw the introduction of the National Living Wage. This April for the first time, both the National Minimum Wage and National Living Wage rates increased at the same time. The National Living Wage is the minimum hourly rate that must be paid to those aged 25 or over.

From 1 April 2019 the National Living Wage increased by 47p to £8.21.

– 21-24 year olds – £7.70 (a rise of 32p)

– 18-20 year olds – £6.15 (a rise of 25p)

– Workers above the school leaving age but under 18 – £4.35 (a rise of 15p)

These rates are recommended by the independent Low Pay Commission and were accepted in full by the government. We are told that there was some discussion on these increases in light of the Brexit vote but ultimately the new pay rates have now come into law. Should the UK economy suffer a severe contraction as a result of Brexit it is possible that future wage increases could be reduced or frozen.

The minimum wage applicable must be paid to all workers including foreign workers eligible to work in the UK. It is important to remember there are penalties for employers that are found to have underpaid their workers together with the risk of criminal prosecutions. HMRC has actively been targeting employers to ensure that they are paying workers what they are entitled to and historically the hospitality sector has proved a successful hunting ground for HMRC.

You may also hear reference to the Living Wage Foundation. The foundation sets a separate living wage that is meant to reflect the real cost of living. These rates are currently set at £9.75 an hour for London and £8.45 for the rest of the UK. These rates are not statutorily binding but over 3,000 businesses across the UK have committed to pay these higher rates including some in the hospitality sector.

The old adage of paying peanuts and getting monkeys may not be as prevalent as was once this case. However, as more organisations sign up to pay more than the minimum wage it may be important to consider what you can do to attract and retain the best staff for your business. Maybe there is an added benefit to paying your staff a little more than your competitors.