As we approach another new financial year, actions have been put into place by the government that aim to tackle the current cost of living crisis and to offer key support to those who need it the most.
April 2023 National Minimum Wage increase
As we are sure you are aware, 1 April 2023 is set to introduce another increase to the UK National Minimum Wage.
Working out the baseline figure for how these rates are converted for Umbrella payment methods can be confusing, so we have taken the reigns and done the math for you.
As a reminder, contractors must - as a minimum - receive the NMW and therefore, the following rates take into account deductions that lie with Umbrella payment methods.
Please also remember, that the national living wage has reduced from the age of 25 to 23.
The national minimum wage rates coming into place from April 2023 are as follows:
|
Category of worker |
NMW |
Umbrella |
|
Aged 23 and above (national living wage rate) |
£10.42 |
£13.55 |
|
Aged 21 to 22 inclusive |
£10.18 |
£13.25 |
|
Aged 18 to 20 inclusive |
£7.49 |
£9.70 |
|
Aged 16-17 inclusive |
£5.28 |
£6.80 |
|
Apprentice Rate |
£5.28 |
£6.80 |
What should you be doing as an employer?
As an employer, you will need to ensure that the correct rate is being paid to your employees on a weekly or monthly basis.
To remain compliant, you should be:
- Monitoring and keeping up the date with the annual increases and applying these to your employees.
- Regularly checking and updating payroll databases holding employees’ birthdays. For example, updating payroll when an employee reaches a certain milestone such as 18, 21 or 25.
- Ensuring that you are not entering a salary sacrifice in any way which could be lowering hourly rate. These could include pension schemes, cycle-to-work schemes, and company car.
- Ensuring your employees are paid the correct rate in any transition of job role. For example, the increase in pay from apprentice rate to normal salary.
- Ensuring you are not deducting work materials such as uniform or tools from an employee’s payslip.
Failing to comply with the HMRC minimum hourly rates could result in penalties of up to £20,000 per worker, alongside the repayments of any underpayments to the specified employees affected. Not only this, but your company can be named in the media for underpaying your employees, having an indefensible effect on your reputation in your industry.