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Last updated: 18 Jan 2021
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2021 National Living/Minimum Wage – ensure you’re compliant

With the National Living/Minimum Wage set to rise from April 2021, hospitality businesses must enforce the new rates or face serious penalties. Owen Russell shares how a National Living/Minimum Wage review can ensure your business remains compliant and avoids possible fines.

The National Living/Minimum Wage is a statutory requirement for a minimum hourly wage to be paid to workers in the United Kingdom.

From April 2021, the National Living/Minimum Wage rates are as follows:

  • The rate for workers aged 23 and over will increase from £8.72 to £8.91
  • The rate for 21-22 years olds will increase from £8.20 to £8.36
  • The rate for 18-20 years olds will increase from £6.45 to £6.56
  • The rate for 16-17 years olds will increase from £4.55 to £4.62
  • The apprentice rate (for apprentices aged under 19 or in their first year of apprenticeship) will increase from £4.15 to £4.30. 

Due to COVID-19, the rate increases aren’t as high as previous years. However, the increase of 2.2% from £8.72 to £8.91 will be extended to ages 23 and 24 for the first time. 

Failure to correctly meet and operate the new rates is not an option. If identified by HMRC, your organisation could be issued with severe penalties and be named and shamed on HMRC’s website. This applies to businesses with arrears of more than £500 in National Living/Minimum Wage payments to their workforce

Approximately 140 companies, including hotels and restaurants, were investigated between 2016 to 2018 for failing to pay £6.7m to more than 95,000 employees.

For businesses operating tronc schemes, allocations from tronc cannot count towards the National Living/Minimum Wage.

Finally, if you require your staff member (the worker) to purchase specific items, such as overalls, then any deductions made from employee pay or payments made to you (the employer) in respect of those items, will also need to be considered for National Living/Minimum Wage purposes, as relayed by Mark Taylor here.

About the author

Owen Russell

+44 (0)20 7556 1280
russello@buzzacott.co.uk
LinkedIn

The National Living/Minimum Wage is a statutory requirement for a minimum hourly wage to be paid to workers in the United Kingdom.

From April 2021, the National Living/Minimum Wage rates are as follows:

  • The rate for workers aged 23 and over will increase from £8.72 to £8.91
  • The rate for 21-22 years olds will increase from £8.20 to £8.36
  • The rate for 18-20 years olds will increase from £6.45 to £6.56
  • The rate for 16-17 years olds will increase from £4.55 to £4.62
  • The apprentice rate (for apprentices aged under 19 or in their first year of apprenticeship) will increase from £4.15 to £4.30. 

Due to COVID-19, the rate increases aren’t as high as previous years. However, the increase of 2.2% from £8.72 to £8.91 will be extended to ages 23 and 24 for the first time. 

Failure to correctly meet and operate the new rates is not an option. If identified by HMRC, your organisation could be issued with severe penalties and be named and shamed on HMRC’s website. This applies to businesses with arrears of more than £500 in National Living/Minimum Wage payments to their workforce

Approximately 140 companies, including hotels and restaurants, were investigated between 2016 to 2018 for failing to pay £6.7m to more than 95,000 employees.

For businesses operating tronc schemes, allocations from tronc cannot count towards the National Living/Minimum Wage.

Finally, if you require your staff member (the worker) to purchase specific items, such as overalls, then any deductions made from employee pay or payments made to you (the employer) in respect of those items, will also need to be considered for National Living/Minimum Wage purposes, as relayed by Mark Taylor here.

How we can help

How can we help?

We provide hospitality businesses with assurance by offering National Living/Minimum Wage audits. Our reviews will confirm the impact the proposed increases will have on your business, outline any concerns we may have, and advise you on the options available to ensure you meet the demands made by HMRC. 

If your organisation operates a tronc scheme, upon request, we’ll analyse your existing processes and provide a detailed report highlighting whether your arrangement correctly provides an exemption to National Insurance Contributions.

Get in touch

Call us today on +44 (0)20 7710 3389 or email buzzacotttroncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.

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