National Minimum Wage Increase
4th March 2018
Late in 2017, the government published a list of 260 companies that failed to pay the minimum wage.
Together, these companies owed 16,000 workers a combined £1.7 million. Not only did the companies have to pay up, but they were also hit with £1.2 million in fines.
When the next list comes out, you probably don’t want to be on it. So it’s important to keep up with minimum wage increases as they happen—such as this April.
National Living Wage
From 1st April 2018, the National Living Wage (NLW) will rise from £7.50 per hour to £7.83 per hour—an increase of 4.4% and the biggest pay rise since 2008. This applies to workers aged 25 and over.
National Minimum Wage
All rates of the National Minimum Wage (NMW) will also increase:
Workers aged 21 – 24: from £7.05 to £7.38 per hour
Workers aged 18 – 20: from £5.60 to £5.90 per hour
Workers over compulsory school age but not yet 18: from £4.05 to £4.20 per hour
Apprentice rate: from £3.50 to £3.70 per hour
What you need to know
The rates of NMW and NLW are the legal minimum that you must pay your workers. And thanks to a new online form, it’s easier than ever for staff to report you if you don’t get it right.
What’s more, the removal of tribunal fees last year means that workers have nothing to lose from making a claim against you.
What other rates will go up in April?
Statutory payments to employees who are absent from work are also set to go up.
The following payments will all increase from £140.98 to £145.18 per week:
Statutory Maternity Pay (SMP)
Statutory Paternity Pay (SPP)
Statutory Adoption Pay (SAP)
Statutory Shared Parental Pay (ShPP)
Employees who are off sick will also receive extra pay. From 6th April 2018, Statutory Sick Pay (SSP) will rise from £89.35 to £92.05 per week.
Additionally, minimum auto-enrolment contributions to pension schemes are set to increase. You’ll have to contribute at least 2%, while employees must contribute a minimum of 3% to the pension scheme.
What happens if you don’t follow the law?
It’s embarrassing enough to be on a public list of stingy, law-breaking companies. But that pales in comparison to the maximum fine of £20,000 per employee you could get for not paying your staff the proper rates.
Some of the companies on the list may have made genuine accounting mistakes (that’s what Debenhams insisted, anyway). And when you have a small business, it’s sometimes difficult to keep track of every single wage increase.
But as we’ve seen, the consequences of not paying your workers the right amount could have devastating effects on your business.