It’s the natural cycle of business to take on a new set of apprentices and hire younger people to fill out the ranks, passing on the tools of the trade to the next generation. But each year the government changes the wages and rights of young people, which will affect the decision on whether to hire or not.
The first minimum wage was introduced by the New Labour government 20 years ago this month, it was only £3.60 per hour back then, but it was also paid to a lot fewer people than it is now.
Over the years it has been raised drastically and this year is no different, increases in National Minimum Wage and the National Living Wage came into force from 1st April 2019, meaning that you should ensure all staff earn at least either one of the two rates. For workers aged 25 and over outside of London the rate increased by 4.85% from £7.83 per hour to £8.21 per hour.
People below 25 have seen increases as well, for 21-24 year olds the minimum wage is now £7.70. For those ages 18-20, the wage is £6.15, below 18 it is £4.35.
Even though George Osborne’s politicking created the ‘National Living Wage’ and ‘The National Minimum Wage’, they are essentially the same thing, ‘Minimum Wage’ is for people below 25, ‘Living Wage’ is for people over 25. Both are a legal requirement and must be implemented by your business.
This is still short of the figure that the Living Wage Foundation suggests employees should be paid to have and what they consider to be a ‘real living wage’ which is set at £9 per hour across the UK, and £10.55 per hour in London.
The fine imposed on employers that do not pay the minimum wage is 200% of arrears owed to workers, with the maximum penalty being £20,000 per worker.
Apprentices have the lowest wage at just £3.90 but this only applies to people under 19, or who are 19, or over and in the first year of their apprenticeship. After that, the wage must increase to whichever relevant bracket they are in.
For help with payroll and calculating all of the different pay rates, contact MCC Accountants. We have been running payroll for small businesses in Manchester and Salford for 10 years so can help you streamline the process and keep your business inline with legislation and updates.