Making sure you are compliant with the new living wage rates

Since the beginning of April 2024, the anticipation of a significant 9.8% increase in the National Living/Minimum Wage looms over all businesses across the United Kingdom. Ensuring compliance with these new rates is not just a recommendation but a legal necessity, as failure to do so can result in severe penalties. In this blog we emphasise the importance of conducting a thorough review to guarantee adherence to these regulations and avoid potential consequences.

The National Living/Minimum Wage stands as a crucial statutory requirement, dictating the minimum hourly wage for workers in the UK. 

Effective from April 2024, the updated National Living/Minimum Wage rates are as follows:

Workers aged 21 and overMinimum Wage from April 2024Minimum Wage Until April 2024
Workers aged 21 and over£11.44£10.42
18 – 20 year olds £8.60£7.49
16 – 17 year olds £6.40 £5.28
Apprentices (under 19 or in their first year)£6.40 £5.28

There has also been an update to the rules relating to calculating holiday entitlement for those who work irregular hours. For leave years beginning on or after 1 April 2024, holiday entitlement for irregular hours and part-year workers will now be calculated as 12.07% of actual hours worked in a pay period. This is a new approach designed to allow annual leave entitlement to be lawfully pro-rated downwards to reflect hours actually worked.

Non-compliance with these revised rates is not an option. HM Revenue & Customs (HMRC) holds the authority to impose severe penalties on businesses found in violation, including publicising offenders on their website. This enforcement extends to businesses with National Living/Minimum Wage arrears exceeding £500.

For businesses utilising tronc schemes,(a system that allows your business to fairly share tips across your team) it’s crucial to note that allocations from tronc cannot be considered towards meeting the National Living/Minimum Wage requirements.

Additionally, deductions from employee pay for specific items such as overalls, or payments made by the employer in respect of such items, must be carefully assessed for compliance with National Living/Minimum Wage regulations.

How can businesses ensure compliance? 

Seeking assistance through National Living/Minimum Wage audits can provide invaluable assurance. These audits analyse the impact of proposed wage increases on businesses, identify potential concerns, and offer guidance on ensuring compliance with HMRC requirements.

For businesses operating tronc schemes, specialised analysis of existing processes can be conducted to determine whether these arrangements correctly exempt National Insurance Contributions.

Staying abreast of and compliant with National Living/Minimum Wage regulations is imperative for all businesses so make sure you conduct thorough reviews and seek professional guidance to mitigate risks and ensure smooth operations within legal parameters.

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