National Minimum Wage from April 2021
|23 years old and over (National Living Wage)||£8.91|
|21 to 22||£8.36|
|18 to 20||£6.56|
The minimum wage is rising in April and the age where the National Living Wage is applied falls to 23. The simplest way to ensure you meet the minimum wage criteria is to pay at an hourly rate that is at least at the minimum age for that employee.
For a worker aged 24 and working 37.5 hours per week the minimum wage from April 2021 would be as follows:
£8.91 x 37.5 = £334.13 per week
Using weekly rate x 52 to get an annual figure then divide by twelve this gives a monthly rate of:
Last year a worker of the same age working the same hours would have had a monthly minimum wage of £1332.50.
The minimum wage is applied for the pay reference period, which is the period the hours are worked. This means if you are paying for hours worked in March you do not need to apply the minimum wage changes until April hours are worked. This can become complicated however and for many companies it will be simpler to ensure the minimum is met in the current period.
Pay counting towards minimum wage can also include other pay items besides basic hourly pay such as bonuses or commission. There are many pay types that do not count such as shift or overtime premiums, expenses and tips. For many companies it may be simpler to consider the basic hourly rate. There is a list available of payment types that qualify and do not qualify on the HMRC website available here.
NMW and Deductions on the Payslip
If deductions are made from the worker great care is needed as HMRC will consider many deductions as reducing the workers wage rate for minimum wage calculations. Salary sacrifice pensions are a common pitfall but also employees purchasing goods or services and paying through their wage slip may fall foul as well.
National Minimum Wage calculations can become complex and anyone considering complex pay arrangements should take great care.