Employers – Are You Paying Your Staff Enough?

Setting wages usually comes down to market rates and employer resources. And while it’s generally up to a business to decide how much to offer a recruit, pay is subject to some legal minimum hourly rates.

These minimum wages aren’t always well understood, and the fact that the rates change annually can be problematic for businesses that don’t have a good grasp of their legal obligations. They risk having to pay fines, as well as having to make up for months or years of underpayments. There is also the potential for reputational damage that comes from being found to have underpaid staff.

The national minimum wage

This is payable to workers aged under 23 (but over school-leaving age) and to apprentices. The amount varies depending on age, with the highest rate currently set at £10.18 for 21 and 22-year-olds. The lowest is £5.28 for apprentices and under-18s.

The national minimum wage is a strict baseline; employers must pay qualifying workers at least this amount.

The national living wage

This applies to the over-23s. It’s currently £10.42 but looks set to rise to £11 in April 2024. And it’s not to be confused with the (optional) real living wage – as with the national minimum wage, the national living wage is set in law and is a mandatory minimum.

The real living wage

The real living wage is currently £10.90, and for those in London, it’s £11.95. These figures are set by the Living Wage Foundation and based on the cost of meeting everyday needs, hence the higher rate for London.

Employers don’t have to pay a real living wage, but it can make sense to do so. Currently, more than 13,000 businesses in the UK are said to be ‘living wage employers’, highlighting their support for the idea that people deserve to be paid a wage that covers the cost of living. According to the Living Wage Foundation, over 400,000 employees have been given a pay rise as a result of its campaign.

Some employers take account of the minimum wage rates as a matter of course; they’ve got it covered. For others, the minimum rates may not seem all that relevant because they pay more than those amounts anyway. But for workforces that contain or are made up of lower-paid workers, the statutory minimum levels of pay are of huge significance. Employers must know the rules, rates and expected changes. And for all organisations, regardless of size, making sure rates of pay throughout the business are, and remain, legally compliant is vital.

For advice about pay or any other workplace issue, contact Julian Cole at info@bsandi.co.uk or call on 01264 353411.