September 17, 2010
Employers are being warned that failure to introduce October’s new National Minimum Wage could lead to expensive employment claims and government penalties.
From October 1st, minimum wage rates will increase across the board, with those aged 21 and over receiving £5.93 instead of £5.80, and 18 to 20-years-old £4.92 instead of £4.83. Young workers, those aged under 18 but above compulsory school age will also receive £3.64, rising from £3.57.
But employers that fail to heed the new law could face hefty penalties following the introduction of fines last year, with automatic penalties ranging from £100 to £5,000 depending on the scale of the offence.
"It is important that those companies who have reduced an employee's hours or salary as a short term measure, because of the recession, pay attention so that they are not falling foul of the new rates," warned Ann Tunstall, Payroll Manager at DJH accountants.
In addition to the yearly increase, an apprentice minimum wage of £2.50 per hour will also be introduced, applying to all apprentices under the age of 19 and those in the first year of their apprentice.
Finally, employees whose accommodation is covered by employers will undergo a wage increase from £4.51 to £4.61 per day.
Employers must make sure that they fully understand the new rates and apply them in the correct fashion. But, as Ms Tunstall stated, there are many factors to consider when administering minimum wage to employees.
"When calculating the minimum wage, businesses should be aware that the definition of pay for the purpose of national minimum rate can include other elements such as bonus, incentive or commission payments but cannot include benefits in kind, expenses and certain allowances,” she added.
"What to include and what to exclude is vitally important."
