Minimum wage rates increase from April 2020

Businesses that have a significant number of staff paid at Minimum Wage or National Living Wage rates should take note that from April 2020 the rates are increasing.

 

In more detail the changes announced 31 December 2019 are:

  • Annual pay rise of up to £930 for a full time worker.
  • National Living Wage (NLW) increasing from £8.21 to £8.72 per hour.
  • New NLW rate starts on 1 April 2020 and applies to over 25 years olds.

Nearly 3 million workers are set to benefit from the increases to the NLW and minimum wage rates for younger workers, according to estimates from the independent Low Pay Commission. The rise means Government is on track to meet its current target for the NLW to reach 60% of median earnings by 2020.

The new rate starts on 1 April 2020 and results in an increase of £930 over the year for a full-time worker on the National Living Wage. Younger workers who receive the National Minimum Wage will also see their pay boosted with increases of between 4.6% and 6.5%, dependant on their age, with 21-24 year olds seeing a 6.5% increase from £7.70 to £8.20 an hour.

It is worth pointing out that these are not advisory rates, they are compulsory if your staff qualify for either the National Minimum or National Living Wage rates.

Those who are not entitled to the minimum wage, according to the HMRC website, are:

  • self-employed people running their own business
  • company directors
  • volunteers or voluntary workers
  • workers on a government employment programme, such as the Work Programme
  • members of the armed forces
  • family members of the employer living in the employer’s home
  • non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and are not charged for meals or accommodation, for example au pairs
  • workers younger than school leaving age (usually 16)
  • higher and further education students on work experience or a work placement up to one year
  • people shadowing others at work
  • workers on government pre-apprenticeships schemes
  • people on the following European Union (EU) programmes: Leonardo da Vinci, Erasmus , Comenius
  • people working on a Jobcentre Plus Work trial for up to 6 weeks
  • share fishermen
  • prisoners
  • people living and working in a religious community

HMRC’s powers to enforce compliance in this area have teeth. Not only will you have to stump up for any arrears if you pay less than the statutory rates, HMRC can also levy penalties.

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