The National Minimum Wage (NMW) is the minimum pay per hour most workers under the age of 25 are entitled to by law.
The National Living Wage (NLW) is the minimum pay per hour most workers aged 25 and over are entitled to by law.
The rate will depend on a worker’s age and if they are an apprentice.
New rates, from 1st April 2019 are:
- £8.21 per hour for ages 25 and over
- £7.70 per hour for ages 21 to 24
- £6.15 per hour for ages 18 to 20
- £4.35 per hour for school leaving age to 17
- £3.90 per hour for apprentices
The new rates will apply to the next pay reference period that begins on or after the date that either a new rate increase begins, or an employee reaches a new age bracket.
Does that mean you don’t need to pay the new NMW rates from 1st April?
Even though the new NLW and NMW rates increase on 1st April annually, it’s true that your workers might not qualify for the new rates on that date. This is because workers are only entitled to receive the new NLW/NMW rate that’s applicable to their age for pay reference period which starts on or after 1st April. Pay reference periods are determined by how frequently a worker is paid, e.g., weekly or monthly. For example, if a worker has a monthly pay reference period which ends on 25th April, they would only be entitled to receive the new NLW/NMW rate from the first day of the new pay reference period, i.e., 26th April. The same rule applies when a worker has a birthday that would entitle them to a higher rate of NLW/NMW. The worker is only entitled to receive the higher rate from the start of the next full pay reference period after their birthday, not from their birthday itself.
It’s always best to explain this in writing. Please let us know if you wish for us to send you a letter template to acknowledge someone’s increase in wage due to legislation or due to age.
Pension contribution increase
We sent a newsletter out in February to advise of pension contribution increases. To recap:
A total minimum amount of contributions must be paid into your pension scheme. You must make a minimum contribution to this amount and your worker must effectively make up the difference.
To confirm, the rates from 6th April 2019 are:
- The total minimum contribution is 8% of qualifying earnings (an increase from 5%) and the employer’s minimum contribution is 3% (an increase from 2%). If you only pay this 3% minimum, it means the worker’s minimum contribution is 5% (an increase from 3%).
Again, we would suggest you put this in writing to your employee and we can provide a template if you wish.
From April 2019, all workers must get payslips. This includes agency workers, who must get payslips from their agency.
Anyone who is genuinely self-employed is not entitled to receive a payslip.
A payslip must show:
- The gross amount of wages or salary to be paid
- The net amount of wages or salary to be paid
- The amounts of any variable deductions
- The amounts of any fixed deductions
- A breakdown of how the wage will be paid if more than one payment method is used (e.g., cash and cheque)
From April 2019, a payslip must show the total number of variable hours a worker has worked. This is only required when workers get a different wage depending on the hours they have worked. This might be because they have worked overtime, the number of hours they work changes in each pay period, or the rate they get for working certain hours is different.
The payslip only needs to show the hours that actually vary. For example, if a worker is salaried to work for 20 hours in a pay period but also works 4 hours of overtime, only the additional 4 hours must be recorded.
These hours can be shown as a single total or they can be broken down.