From 1st April 2018, the National Minimum Wage (NMW) and National Living Wage (NLW) increased for workers in the UK. The NMW and NLW are reviewed every year, and both increased last April 2017.
Find out more about the new rates of National Minimum Wage and National Living Wage and how you can ensure compliance as an employer through accurate payroll.
NMW and NLW – New Rates from April 2018
The table below sets out the new rates of NMW and NLW from April 2018, in comparison to that of April 2017.
If you’re still unsure what you, as an employer, should be paying or, as an employee, getting paid, you can use the minimum wage calculator from GOV.UK to find out.
|Year||25 + (NLW)||21 to 24 (NMW)||18 to 20 (NMW)||Under 18 (NMW)||Apprentice|
|Increase Hourly||+ £0.33||+ £0.33||+ £0.30||+ £0.15||+ £0.20|
Important Note on Apprentice Rates
Employers should note that apprentices should only receive the apprentice rate if they are aged under 19 or are in the first year of their apprenticeship.
If an apprentice is aged over 19 or has completed the first year of their apprenticeship; they are entitled to the NMW rate relevant to their age group. For example:
Example 1: James is 23 years old and in the first year of his apprenticeship. For the first year, he will be entitled to the apprentice rate of £3.70 per hour. This will then increase when he completes the first year of his apprenticeship to the NMW for 21 – 24-year-olds of £7.38.
Example 2: Alex is 20 years old and in the second year of her apprenticeship. As she has completed the first year, she is entitled to the NMW for 18 – 20-year-olds of £5.90.
How Is The Rate of NMW and NLW Wage Decided?
Increases in the rates of NMW and NLW are proposed by the Low Pay Commission, who advise the Government about the minimum rates of pay for employees in the UK. The Government will then decide whether to accept the recommended increases.
What’s The Difference Between the National Living Wage and National Minimum Wage?
Despite using the term ‘Living Wage’ the National Living Wage is not associated with the Living Wage Foundation who promote employers paying a ‘real living wage’ (see below).
The NLW was launched in 2015 and is essentially the minimum wage employers must pay to those aged 25 and over; the NLW was part of the Government’s commitment to raising the wages of those aged 25 and over to £9.00 per hour by 2020.
What is the ‘Real’ Living Wage?
The Living Wage is a scheme promoted by the Living Wage Foundation, an organisation set up to encourage employers to pay their recommended minimum wage based on living costs. Their current recommended rates of pay are:
- £8.75 across the UK.
- £10.25 in London to reflect the higher cost of living.
Unlike the NMW or NLW the proposed real living wage has no incremental increases in pay based on the age of the employee.
Do I have to pay it?
No, the biggest difference between the Government set rates of pay and the Real Living Wage is that the Real Living Wage is voluntary.
Whilst many larger companies such as Oxfam, Brewdog and Ikea have adopted this higher rate of pay, it is not always feasible for smaller companies to pay this higher amount.
Fully Managed Payroll Services from First Call Financials
Your employees have a legal right to be paid the correct amount on time, but with payroll and taxation becoming increasingly more complex, the margin for error becomes wider.
Outsourcing your payroll ensures that payroll is processed error free, with changes implemented in real-time to reflect the impact to employee’s rates of pay as they happen.
For more information about the benefits of outsourcing your payroll; why not give one of our specialist team a call today on 0117 379 0810.
- 5 Things to Think About from a Financial Perspective When Starting up a New Business - July 28, 2021
- Income Tax in Wales Is Changing – What You Need to Know - September 24, 2018
- Landmark Gig Economy Case – Pimlico Plumbers - August 29, 2018
This post was written by Tarah