How can you comply with minimum wage laws?
10/02/2023
As an employer, you need to make sure you fulfil all of your legal obligations, which include abiding by minimum wage laws.
To make sure you don’t fall foul of the law, you need to be aware of how different circumstances impact the minimum wage you can pay.
What is the National Minimum Wage?
There are different regulations depending on the age of the employee and whether they are an apprentice. The National Living Wage applies to employees that are aged 23 and over.
Currently, the National Minimum Wage you can pay is as follows:
| 23 and over | 21 to 22 | 18 to 20 | Under 18 | Apprentice |
| £9.50 | £9.18 | £6.83 | £4.81 | £4.81 |
However, from April 2023, these figures will increase to:
| 23 and over | 21 to 22 | 18 to 20 | Under 18 | Apprentice |
| £10.42 | £10.18 | £7.49 | £5.28 | £5.28 |
It should be noted that the apprentices are entitled to the minimum wage for their age if they are aged 19 or over and have completed the first year of their apprenticeship.
You must keep records that can prove you are paying the minimum wage. Your payroll software should be able to record and store this information for you.
What contributes to this wage?
Any Income Tax and National Insurance Contributions (NICs) should be included in the wage calculation.
For instance, if you paid a 23-year-old the minimum wage, this would be £10.42 per hour before any tax deductions.
If any overpaid wages are due for repayment, these also contribute to the wage, alongside wage advances or loans.
However, if you run a hospitality business and your employees receive tips, this does not impact the wage that you have to pay.
Other payments such as extra pay for working unsociable hours or if you have covered expenses that benefit your business should not be included when calculating the wage.
Find out more about this here.
How should you decide your employees’ wages?
Whilst you must pay your employees the aforementioned wages at a minimum, this shouldn’t dictate the wage you offer.
To hire and retain staff, you must make sure that the salary you offer is in line with what your competitors are offering.
Before deciding on a salary for your employee, you should review your business’s finances to ensure the wage that you offer is sustainable.
Need advice on payroll and related matters? Contact our team today.
