Minimum wage increases 2022
The increased National Minimum Wage (NMW) and National Living Wage (NLW) rates that will apply from April 2022 have now been published, as follows:
- NLW (23+) to increase from £8.91 to £9.50
- NMW (21-22) to increase from £8.36 to £9.18
- NMW (18-20) to increase £6.56 to £6.83
- NMW (16-17) to increase £4.62 to £4.81
- Apprenticeship Wage to increase from £4.30 to £4.81
What happens if an employer is in breach of the NMW regulations?
Employers will need to ensure that they are up to date with the increased rates prior to 1 April 2022, as a failure to pay the prescribed rates is against the law and could land an employer in trouble.
If HMRC is informed or discovers that an employer has not paid at least the minimum wage, they can send a notice of arrears plus issue a penalty for not paying the correct rate of pay to the employer. In addition, HMRC can also take employers to civil court and the maximum fine for non-payment is £20,000 per worker. Employers who fail to pay can be named publicly and banned from being a company director for up to 15 years.
In addition to the enforcement action that can be taken by HMRC, employers can also be taken to an employment tribunal or a civil court if an employee or worker feels they have not been receiving the NMW or NLW, if they’ve been dismissed or experienced unfair treatment because of their right to the NMW or NLW or if they’ve been discriminated against because their age means they are entitled to a higher minimum wage rate.
Traps and pitfalls to avoid
Employers must ensure they understand the rules regarding the minimum rates, as there are a certain number of issues that can catch employers out, such as:
1. Including elements of pay that don’t count towards minimum wage, such as tips.
2. Charging a worker more than the stated offset rate for living accommodation (currently £8.36 per day and increasing to £8.70 per day from 1 April 2022).
3. Making wage deductions that are deemed to be for the employer’s “own use or benefit”, such as a Christmas club saving scheme.
4. Making wage deductions for items or expenses that are connected with the job, such as safety clothing, uniforms, tools etc.
5. Not paying for all the time worked such as time spent travelling, training or downtime at the employer’s disposal.
Furthermore, employers must remember that apprentices are subject to their own special rate of pay, and they must be mindful to not pay the apprentice rate to somebody who isn’t actually an apprentice (recognised apprentices must have an apprenticeship contract and undergo an element of structured training) and they must ensure they are not continuing to pay the apprentice rate for too long. The apprentice rate only applies to apprentices who are under the age of 19, or if aged 19 or over within the first year of their apprenticeship.