Check you're not short-changing your staff as NMW and Living Wage rates set to go up

By: Fanny Marshall

Date: 20 February 2017

Check you're not short-changing your staff as NMW and Living Wage rates set to go upThe Department for Business, Energy and Industrial Strategy recently published its latest list of businesses that have underpaid their employees. Topping the list was Debenhams which was fined £63,000 for short-changing nearly 12,000 workers in 2015.

However small businesses, especially hairdressers and those in the hospitality and retail sectors, were also found to have been underpaying staff and faced financial penalties in addition to paying back employees.

Check your rates

Businesses should check they're paying their staff at least the National Minimum Wage (NMW) or National Living Wage (NLW). Rates are set to increase on 1 April this year.

The current minimum wage rates are:

  • National Living Wage (25 years and over) - £7.20 per hour
  • adult rate of National Minimum Wage (21 to 24-year-olds) - £6.95 per hour
  • 18 to 20-year olds - £5.55 per hour
  • 16 to 17-year-olds - £4.00 per hour
  • apprentice rate - £3.40 per hour (under the age of 19, or older than this but in the first year of the apprenticeship period)

Rates are set to increase on 1 April to:

  • National Living Wage (25 years and over) - £7.50 per hour
  • adult rate of National Minimum Wage (21 to 24-year-olds) - £7.05 per hour
  • 18 to 20-year-olds - £5.60 per hour
  • 16 to 17-year-olds - £4.05 per hour
  • apprentice rate - £3.50 per hour (under the age of 19, or older than this but in the first year of the apprenticeship period)

All workers are entitled to receive the NMW or NLW (at the relevant rate), and cannot sign away their right to this entitlement.

No excuses

Excuses offered by businesses for not paying employees have ranged from using tips to top up pay, docking workers' wages to pay for their Christmas party and making staff pay for their own uniforms out of their salary. None of these are valid or legal reasons for underpaying staff.

Employers who pay workers less than the NMW or NLW face paying large financial penalties of up to 200% of arrears, in addition to paying back the unpaid wages to the worker or workers in question. With the Government cracking down on workplace exploitation, spending £23.3 million on minimum wage enforcement and appointing its first ever director of labour market enforcement, it makes sense to check you’re not short-changing your staff.

(Source: The Department for Business, Energy and Industrial Strategy)