If
you have employees, you need to be aware that the next increase in the minimum
wage comes into force on October 1st. For anyone over 21, the hourly
rate rises by 19p to £6.50. For 18 to 20 year old employees the rise is 10p to
reach £5.13 an hour. For those in work at the age of 16 or 17, it is 7p, making
their minimum wage per hour £3.79, although youngsters only become eligible for
this on the last Friday in June of the year in which they become 16.
Now
that some form of education is compulsory until the age of 18, 16 and 17 year
olds can only be employed if they are also undergoing some part time education
or training as well. You might have one or more young people on apprenticeships
with you, in which case their minimum hourly wage rises by 5p to £2.73. As your
outsourced bookkeepers will
know, after apprentices’ first year, the rate remains at this level for those
under 19, while those over 19 must receive the same rate as other employees in
their age group.
Non-compliance can
be Expensive
Failure
to comply with these regulations can evoke some hefty penalties, and these
become even more severe on October 1st. Where currently the maximum
fine that could be imposed is £5,000 per employee, it is set to go up to
£20,000, which will add up to a significant total if several workers are
involved.
HMRC
have powers to investigate employers at any time if they have received a
complaint or have reasons to suspect non-compliance. They can request pay
records for up to the previous three years.
Make Sure you
Comply
You
are advised to get your bookkeepers to check the
payroll and ensure that all your employee records are up to date, especially
those for young people whose rates could have changed on their birthdays. Rules
for what can be excluded when calculating the minimum wage can be complicated
and many employers have fallen foul of the regulations because they were not
known or understood. Outsourced
bookkeepers keep up to date on all these aspects, so make sure you discuss
the changes with them before the end of the month.
If
you discover that anyone has been underpaid, pay the arrears straight away to
demonstrate that it was just a mistake and you have acted in good faith. That
way, you may be able to avoid the heavy financial penalties that can be imposed
where employers deliberately flout the rules.
