Proposed new laws: minimum wage & payslips

Two orders, concerning the National Minimum Wage and payslips, have been recently laid before parliament.

National Minimum Wage

The National Minimum Wage (Amendment) Regulations 2018 have been laid before Parliament and the following changes will apply from 1 April 2018:

Age group

The new rate (from April 2018)

The current rate (from April 2017)

Aged 25+ (National Living Wage)

£7.83 per hour

£7.50 per hour

Aged 21 – 24 (National Minimum Wage)

£7.38 per hour

£7.05 per hour

Aged 18 – 20 (National Minimum Wage)

£5.90 per hour

£5.60 per hour

Aged 16 – 17 (National Minimum Wage) (applies to those who are not apprentices)

£4.20 per hour

£4.05 per hour

Apprentice (National Minimum Wage)

£3.70 per hour

£3.50 per hour

Accommodation offset amount (deduction applicable where an employer provides a worker with living accommodation)

£7.00 per day that accommodation is provided

£6.40 per day that accommodation is provided

It is important to ensure that your systems are updated so that you comply with the minimum amounts to be paid from April 2018. It will become particularly transparent as to whether employers are paying the correct minimum amount once the payslips regulations (detailed below) are in force.

Payslips

The Employment Rights Act 1996 (Itemised Pay Statement) Amendment) (No 2) Order 2018 (“the order”) was laid before Parliament on 8 February 2018. It is due to become law on 6 April 2019.

The order requires employers to provide payslips which state the number of hours being paid where wages vary according to time worked (i.e. where the employee / worker is paid on an hourly rate).

The purpose of the change is to increase transparency for employees / workers so that they can identify, at the point of reading a payslip, whether the number of hours they have been paid for is commensurate with their own understanding. The ultimate objective is to increase National Minimum Wage compliance, as by providing a payslip the employee / worker has the evidence needed to challenge the employer if they think there has been a miscalculation leading to underpayment.

Where an employer does not give a statement, or gives one that is not compliant with what is required, the order allows an employee or worker to ask an employment tribunal to enforce their right.

At the moment, workers (which are distinct from employees) are not by law entitled to receive a payslip. Under the new law, workers would benefit from receiving a payslip for the first time and both employees and workers would benefit from an increase in the information provided on their payslips. It is expected that this will be particularly beneficial for low paid workers as they are the most likely to be hourly paid accordingly to time worked rather than salaried.

Although this change will not become law until next year, employers should ensure that their systems have the ability to provide these statements and should ensure that hours worked are entered correctly into payroll systems.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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