What is NMW?
The National Minimum wage is the minimum a worker in the UK is entitled to dependant on age. They were originally enforced in April 1999 to ensure workers in the UK are paid fairly and to increase efficiency in the UK labour market. The rates are evaluated annually by the government, the current rates have increased from April 2021.
The National Minimum Wage is worked out at an hourly rate, but it applies to all eligible workers even if they’re not paid by the hour. This means that, however someone gets paid, they still need to work out their equivalent hourly rate to see if they’re getting the minimum wage.
“The National Minimum and Living Wages have increased every year since they were introduced, supporting the lowest paid, and despite the challenges we’ve faced recently, this year will be no different. That’s why we’re providing a well-earned pay rise to 2 million people, which will be a welcome boost to families right across the UK. To make sure the next generation isn’t left behind, everyone over 23 years old will also now be eligible.”
– Prime Minister Boris Johnson
What is NLW?
The national living wage is the minimum rate employers can pay workers set by the government. It normally applies to workers aged 25+ however, for the first time since 2016, the age limit has been lowered to 23 yrs + meaning more younger people will be eligible for the Living Wage. Employers are not obligated to pay this rate; however, some still choose to. The NLW for those in London is £10.85 and £9.50 for the rest of the UK. Employers must keep a record of the hours that employees have worked and are obligated to pay in respect to the NMW/NLW set.
What are the Effects of the changes to NMW?
Constant changing legislation can be complicated when calculating NMW/NLW and this can lead to difficulty in the workforce Employers must ensure the correct calculations are conducted and workers must be correctly identified as “unmeasured workers” or “salaried workers”. An example, employees who received shift allowance and an annual salary are now classified as ‘salaried workers’ rather than “unmeasured workers”. This will result in a now classified as ‘salaried workers’ rather than “unmeasured workers”. This will result in a different NMW calculation, failure to identify the change in legislation could result in financial penalties and an aggrieved worker.
For more information visit Gov.uk
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