National Minimum Wage is Increasing in April
Another substantial increase in the National Minimum Wage (NMW) takes effect on 1 April 2023 with the main rate for employees aged 23 and over increasing from £9.50 an hour to £10.42 an hour, which is a 9.7% rise. The full table of rates for younger ages is available from the government website. I don't begrudge anyone a pay rise and this one just about matches inflation, but when the government announces a big increase it is private sector businesses that have to work out whether they can afford those increases and either put up their prices to customers or somehow reduce their overall wages bill - perhaps by not replacing staff or by trimming back hours where possible.
NMW was introduced in 1999 when the rate was £3.60 an hour so it has risen by nearly 3 times in that time and seems certain to have risen by more than 3x by its 25th anniversary in April 2024.
My concern is to ensure that employers don't get caught out with the intricate rules around NMW because it is down to HMRC to police NMW and there are name and shame rules that can publicise failures by any employer so think about;
- You must pay your employees for all the hours they work - do your records show the actual time worked and not just a shift within a rota? Is there an issue around employees working through their breaks?
- Do your employees carry out additional duties such as cashing-up or cleaning after a shift?
- If your employees only earn minimum wage you cannot deduct anything from them (eg for uniform or savings club)
These are just a few examples, there are many more and well-known companies have fallen foul of the NMW rules, which shows how difficult it can be to get this right - one list from 2020 included John Lewis, Welcome Break, Enterprise Rent-A-Car and Sheffield United Football Club, a fine selection of big business! CHP clients who have subscribed to our tax investigation insurance can speak to our external consultants on this and any other employment law matter where the only additional cost is the phonecall you make to them.