Understanding the UK’s Minimum Pay Scales

The National Living Wage is frequently in the news, with even large and reputable companies under the spotlight for not having kept up with regulations and incurring fines for underpaying some staff.

This has highlighted how important it is for companies of every size to understand their obligations and comply with the regulations.

The UK has two compulsory minimum pay scales in place, governed by two different sets of regulation:

  • National Living Wage (NLW) regulations came into effect in 2016 with the goal of ensuring that all over-25s will be paid at least £9 per hour by 2020.
  • National Minimum Wage (NMW) has been in force since 1999 and applies to employees under 25.

Rates for both the National Living Wage and National Minimum Wage are reviewed annually by the Low Pay Commission.

In April 2018, the National Living Wage increased to £8.05 per hour and will rise to £8.50 per hour by 2019.

Penalties for employers who flout the regulations are punitive. If an employee can prove that they have not been paid correctly, HMRC can issue a fine and insist that employers pay any arrears. If these monies are still unpaid, the employment tribunal could impose fines of up to £20,000. 

Voluntary ‘Real Living Wage’ Scheme

To complicate matters further, there is also a voluntary scheme known as the 'Real Living Wage', run by the charity the Living Wage Foundation, which aims to set a recommended minimum pay-scale based on the cost of living. This is independently calculated each year and applies to all employees over 18.

There are currently around 4,500 accredited employers who support this scheme from very large employers, such as Google or Burberry, through to small, independent businesses. The charity says that by choosing to opt in to the voluntary Living Wage, organisations are more likely to attract the best staff.

As a reputable consultancy with some 20 years experience, we understand the nature of the local job market, which means we can offer you guidance on the optimum hourly pay rates and salaries to attract the best candidates.

For more information about setting appropriate pay rates, contact Tracy Welch at Priority Appointments on 01256 334575 or email us.

 

 

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