On April 1st 2019 the National Minimum Wage is due to increase for employees of all ages. It is important that employers are aware of these changes and ensure that their employees are paid at least the minimum they are legally entitled to from this time. New rates can be seen in the table below.
|Age of Employee or Worker||Minimum Hourly Rate|
|Aged 25 or over||£8.21|
|Aged under 18 (over school leaving age)||£4.35|
|Apprentices under 19 or in their first year||£3.90|
Employers should be particularly aware of ensuring that salaried employees are receiving the minimum wage by ensuring that their salary when broken down into hours worked each week cover the minimum wages. For example, from 1st April a 25 year old employee working 40 hours per week would need to be on a salary of at least £17076.80 per year to meet the minimum hourly rate of £8.21 per hour. This does not include any overtime the employee might work, which would have to be paid on top of the salary to ensure the minimum wage is paid. It is often situations such as this where employers are caught out, when it is not clear on paper that the employee is receiving the National Minimum Wage. EL Direct Ltd carries out a salary review for each of our First for Payroll client?s employees prior to the minimum wage increase to ensure that they will be paying all employees at the correct rate and offers advice if not.
Other factors employees should be aware of is employees moving from one minimum wage band to another part way through the year due to a birthday. Our payroll software monitors employee dates of birth on an ongoing basis and flags up if an employees? rate of pay should be increased part way through the year.
In line with the increase in the National Minimum Wage statutory payments for employees, such as Statutory Sick Pay, Statutory Maternity Pay and Statutory Paternity pay are also increasing. Employers can view these new rates from the Gov.uk website by following the link below:
As with the minimum wage increases, First for Payroll clients will also be advised accordingly, in the event that they are due to pay any of their employees a statutory payment.
Employees who are paid an hourly rate will also be legally entitled to an itemised payslip showing the number of hours they have worked and the rate they have been paid at.
In addition to the minimum wage increases on April 6th 2019 the minimum automatic enrolment pension contributions for both employers and employees are increasing for the final time, in line with the Pensions Act 2008.
The total minimum contributions are rising from 5% to 8%. Employers must legally contribute at least 3% of this, with employees making up the remaining 5%. EL Direct Ltd will automatically increase these contribution percentages for all clients who operate an automatic enrolment pension through First for Payroll from 6th April.
Employers wishing to contribute more than their minimum requirement can do so and employee contributions will decrease accordingly.
Any employee wishing to stop making contributions following this increase can choose to cease contributions but they will not be refunded for any contributions already paid into their pension scheme, if they are outside of the one month opt out window. It is important to note that employers should not encourage employees to opt out of their pension scheme due to the increase in employer contributions as this is contrary to the Pensions Act 2008 and could result in action being taken by the Pension Regulator. Any employee who does wish to opt out following these changes should contact their pension provider directly who will then contact you, and EL Direct Ltd if we are set up as a pension agent on the account, to advise of any opt out notice. This can then be actioned accordingly in the following payroll run.
Although there is no statutory requirement to write to employees regarding these changes the Pension Regulator recommends that employers make their employees aware of the upcoming changes. Employees who are aware of the new rates will also be less likely to question the higher contributions following their first pay after the increases, which should make things easier for employers too. The Pension Regulator provide a template letter explaining these changes which employers can amend and provide to employees via email or print out.
Further information and the template letter for employees can be found on the Pension Regulator's website:
Clients of EL Direct's First for Payroll can also contact us on 0114 2417092 or by emailing firstname.lastname@example.org if they have any questions or would like any further information or advice regarding these changes.
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