The National Minimum Wage and Living Wage

Most employees are entitled to the National Minimum Wage (NMW), the minimum hourly rate. An employee's minimum wage depends on their age and whether they're an apprentice.

When do employees' rates change following a birthday?

If an employee has a birthday which moves them into a new NMW category, their new rate applies in the next full tax period after their birthday.

For example, an employee is paid monthly and turns 21 years old on 23 August:

• Tax month 5 (6 August - 5 September) is paid at their prior rate for 18-20 years old
• Tax month 6 (6 September - 5 October) is paid at their new rate for those 21 and over

Minimum wage check

You can use the minimum wage check option to easily identify minimum wage employees, including apprentices, and ensure that you always pay them enough. When an employee's birthday increases their minimum rage rate, and they are being paid less, the minimum wage check prompts you to adjust the rate.

You can then set specific pay elements to be included in the minimum wage calculation and view and update your minimum wage legislation settings.
 CAUTION: You need to pay the employee using an hourly rate in enter payments for this to work. 

You can apply the minimum wage check to your employees individually in the employee record or to multiple employees via the global changes option.

New rates at year end

To comply with HMRC rules, the effective date of new rates at year end depends on your processing date. Your software's Minimum Wage Check uses rates from the start of the tax period for each pay run.

This year, if your processing date falls on April 1st, 2nd, or 3rd, which are in tax week 52, the rates as of March 28th apply. If your processing date is on April 4th or 5th, which are in week 53, the new rates apply.

For monthly payrolls, the new rates apply when you process tax month 1.

If you'd like to start paying the new rates earlier, you can manually amend employees pay in Enter Payments. However, your software will only validate payments against the new rates based on the dates above. 

Check your pay element settings