Guide to national minimum wage

Current National minimum wage

As an employer, staying informed about the national minimum wage (NMW) and national living wage (NLW) rates is crucial. It’s equally essential for employees to understand these rates to ensure they are being paid correctly.

At PayEscape, we are committed to supporting business owners and employees in navigating these regulations seamlessly. Therefore we have put together a guide on the current NMW and NLW rates for 2024/25.

What is the difference between the National Minimum Wage and the Living Wage?

  • National minimum wage: The highest rate of the NMW, currently £11.44 an hour for 2024/25, set by the government, and must be paid to all workers aged 21 and over.
  • Living Wage: Set by the Living Wage Foundation, applies to workers over 18, is voluntary, and has two rates – a UK rate (£12.00 an hour) and a London rate (£13.15 an hour).

National Minimum Wage / National Living Wage Rates for 2024/25

The national minimum wage increases from the 1st of April each year. Notably, the national living wage now applies to everyone aged 21 and over, compared to the 2023/24 rates where it applied to those aged 23 and over. The updated rates are as follows:

Category Rate Percentage Increase from 23/24
21 and over £11.44 (NLW) 9.8%
18 – 20 £8.60 14.8%
Under 18 £6.40 21.2%
Apprentices £6.40 21.2%

What doesn’t count towards the national minimum wage?

Certain payments do not count towards the national minimum wage:

  • Overtime, weekend, or night shift premiums
  • Bank holiday premiums
  • Tips, gratuities, service charges, and cover charges from customers

However, incentive payments or bonuses can be included as part of basic pay.

Implications for employers and employees

The increase in the national minimum wage and national living wage is beneficial for many workers in the UK, helping them cope with the rising cost of living.

Employers, however, must ensure they comply with these new rates to avoid legal consequences and maintain a positive workplace. Many companies are so busy they often can fall behind with staying compliant with payroll, outsourcing payroll means employers can stay on top of updates regularly and avoid business penalties from HMRC regulations.

Ensuring your employees are paid correctly

Here’s how to handle concerns about underpayment and prevent issues from arising.

Addressing employee concerns

  • Discuss the Issue: If an employee raises concerns, listen attentively, review their evidence (e.g., pay slips, contracts), and clarify the current national minimum wage and national living wage rates.
  • Provide Payment Records: Transparently share payment records, explaining any lawful deductions. Allow employees to make copies for their reference.
  • Seek External Advice: If unresolved, contact advisory services like Acas (0300 123 1100) or the Labour Relations Agency (0289 032 1442) for guidance and mediation.

Proactive measures

  • Update Payroll Systems: Regularly update payroll systems with the latest wage rates. Using a managed payroll service like PayEscape can automate this process.
  • Conduct Audits: Periodically audit payroll to ensure compliance with wage regulations.
  • Train Staff: Educate HR and payroll staff on the latest wage regulations to reduce errors.
  • Communicate Clearly: Regularly inform employees about their pay, including any changes to wage rates or deductions.

How can PayEscape help?

At PayEscape, we offer comprehensive payroll and HR management solutions that ensure your business remains compliant with all relevant wage regulations. Here’s how we can assist:

Fully Managed Payroll Services: Our payroll software is fully managed, taking the burden off your shoulders. We handle everything from calculating wages to ensuring timely payments, all while adhering to the latest national minimum wage and national living wage rates.

Cloud-Based Access: Our cloud-based system allows you instant and easy access from any device, anytime, anywhere. This ensures that you can manage payroll and HR tasks efficiently, even on the go.

Data Security: With ISO 27001 certification, our platform guarantees that all data is stored and managed in line with GDPR best practices, providing peace of mind that your sensitive information is secure.

5* Support: Our 5-star service and support, backed by a 98% client retention rate, mean that we are always there when you need us. Whether it’s resolving payroll queries or providing HR advice, our expert team is just a call away.

Expertise and Experience: Having served clients since 2006, our team of CIPP and CIPD certified professionals brings a wealth of expertise to the table. We ensure that our services are not only efficient but also compliant with the latest regulations.

Seamless Integrations: We provide full integration between accounting, payroll, HR, and time management platforms, making it easier for you to manage all aspects of your business seamlessly.

Flexible Contracts: Unlike other providers, PayEscape offers monthly rolling contracts with no long-term commitment required. This flexibility allows you to adjust your services as your business needs change without worrying about being locked into a long-term agreement.

Staying updated with the national minimum wage and national living wage rates is essential for both employers and employees. PayEscape is here to support you every step of the way, providing payroll and HR management services that make compliance easy and efficient. Contact us today to learn more about how we can help your business thrive.

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