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Are you compliant with new minimum wage regulations?

With the UK national minimum wage (NMW) regulations undergoing changes in April 2024, it is crucial for employers to update their contracts, policies, and payroll practices accordingly. Neglecting these updates can lead to employee grievances, legal disputes, and tribunal cases.


Check if you’re adhering to NMW Laws

Although most employers strive to pay the National Living Wage (NLW), there are circumstances where they might unknowingly fall short. This often happens when employees work small but consistent amounts of unpaid overtime, or when salaried workers put in so many extra hours that their actual hourly wage falls below the NLW.


Avoid being ‘named and shamed’

In a recent move, the government exposed 524 businesses for not paying the minimum wage to their employees. These violations totalled nearly £16 million in unpaid wages. Each of these companies had to compensate their employees for the shortfall and faced fines of up to 200% of the underpaid amount.

The published list of non-compliant companies includes a variety of businesses, from small enterprises to major high street brands, highlighting the government’s firm stance on enforcing minimum wage laws.


National Minimum Wage rates for 2024 / 2025

Effective from 1st April 2024, the new NMW rates are as follows:

  • Age 23 and over: £11.44 (up from £10.42)
  • Age 21 and over: £10.18
  • 18-20 year old rate: £8.60 (up from £7.49)
  • 16-17 year old rate: £6.40 (up from £5.28)
  • Apprentice rate: £6.40 (up from £5.28)

These increases are significant, and employers must carefully consider the impact on their budgets and staffing plans for the upcoming year.


Tips for ensuring compliance with National Minimum Wage regulations

Ensuring that your business complies with the National Minimum Wage (NMW) regulations is critical to avoid legal repercussions and maintain a fair working environment. Here are some practical tips to help you stay compliant:

  1. Regularly review and update payroll practices

Regular audits: Conduct regular audits of your payroll system to ensure that all employees are being paid at least the NMW. This includes checking for any unpaid overtime that could reduce the effective hourly rate below the legal minimum.

Update for rate changes: Stay informed about the latest changes to NMW rates, which typically occur annually on 1 April. Ensure that your payroll systems are updated accordingly to reflect these changes.


  1. Monitor employee ages and milestones

Age-based pay adjustments: Be aware of the different NMW rates for different age groups. Employees’ wages should be adjusted when they reach the ages of 18, 21, and 23, where different rates apply.

Milestone alerts: Set up alerts in your HR system to notify you when employees are approaching age milestones that require a pay adjustment.


  1. Accurate record-keeping

Maintain detailed records: Keep detailed records of all hours worked by employees, including any overtime. This ensures that you can accurately calculate the effective hourly wage.

Documentation: Ensure that all employment contracts and payslips clearly document the hours worked and wages paid, and include all of the information required by statute and/or considered best practice to include.


  1. Training and awareness

Educate managers: Provide training for managers and payroll staff on NMW regulations and the importance of compliance. Make sure they are aware of how to calculate wages correctly and understand the implications of underpayment. Many companies outsource their payroll to a Payroll Services company with whom your internal representative should communicate accurate information of employee hours worked.

Employee awareness: Inform employees about their rights regarding the NMW. This can help them understand their entitlements and report any discrepancies.


  1. Consider salaried employees

Hourly rate calculations: For salaried employees, regularly calculate the effective hourly rate to ensure it does not fall below the NMW, especially if they work a significant amount of overtime.

Adjust workloads: Manage workloads to avoid excessive unpaid overtime that could reduce the effective hourly wage below the NMW.


  1. Utilise technology

Payroll software: Invest in reliable payroll software that automatically updates with the latest NMW rates and calculates wages accurately.

Time tracking: Implement time-tracking systems to ensure that all working hours, including overtime, are accurately recorded.


  1. Seek professional advice

Consult employment law experts: If you are unsure about any aspect of NMW compliance, seek advice from employment law specialists. They can provide guidance tailored to your business needs and help you navigate complex regulations.

Regular consultations: Schedule regular consultations with legal experts to review your practices and ensure ongoing compliance.


  1. Prepare for audits

Internal audits: Conduct internal audits periodically to check for compliance issues and rectify them promptly.

External audits: Consider having an external audit conducted by a third party to ensure impartiality and thoroughness.


The future of the National Minimum Wage

The Low Pay Commission (LPC) has published a report outlining potential future changes to the National Minimum Wage beyond 2024. Historically, the LPC has set the NLW based on a target of two-thirds of median hourly earnings, a target now reached. Consequently, the LPC is advising the government on future steps.

One key recommendation is to reduce the disparity between youth and adult rates. From April 2024, the minimum age for the NLW was reduced from 23 to 21. The LPC suggests further reducing this to include anyone over 18. Additionally, they propose retaining the Apprentice Rate but modifying it to reflect a discount on the age rate during the apprentice’s first year, acknowledging the training costs while allowing for increased wages.

For more detailed information on the LPC’s proposals, you can access their report here.


How Ralli Solicitors LLP can help

Ensuring compliance with minimum wage laws is not just a legal obligation but also a moral one. Employers must stay vigilant and regularly review their payment structures to avoid underpayment and potential penalties.

At Ralli Solicitors LLP, we specialise in helping businesses understand their legal obligations and minimise risks associated with employment-related claims. If you have any questions or need assistance with updating your employment contracts and policies in line with the new minimum wage regulations, please do not hesitate to contact our Employment Law Partner, Mark Higgins on 0161 832 6131 in Manchester or email