The 2024 National Minimum Wage (NMW) and National Living Wage (NLW) changes took effect on 1 April 2024. For employers managing large or complex workforces, ensuring compliance is critical to avoid penalties and maintain smooth payroll operations.
This article outlines the current NMW rates and offers key compliance strategies, helping you stay on the right side of the law and avoid common pitfalls.
2024 National Minimum Wage Rates
From April 2024, the updated NMW and NLW rates are:
- Apprentices: £6.40
- 16-17-year-olds: £6.40
- 18-20-year-olds: £8.60
- 21 and over (NLW): £11.44
You can check the full details and ensure your payroll meets these standards by using our NMW Checker or why not check out our guide, What is the National Living Wage?
Compliance Strategies for Employers
Avoiding wage compliance issues requires more than just updating payroll. Here are actionable strategies to help you ensure compliance with the new regulations:
1. Salary Sacrifice and Minimum Wage
Salary sacrifice schemes can inadvertently reduce employees' pay below the NMW. For example, an employee earning £12 per hour who sacrifices £2 for benefits like pensions may fall below the £11.44 NLW threshold, risking non-compliance. Learn more about salary sacrifice and compliance on HMRC’s website or checkout our guide, How to save on taxes with salary sacrifice pensions
2. Employee Classification
Misclassifying workers, such as apprentices or underestimating age-based rates, can result in underpayment. Regularly auditing employee classifications ensures you apply the correct rates. For help classifying your workforce, check HMRC Worker Classification Guide
3. Automate Payroll Systems
Automation can significantly reduce the risk of errors, ensuring wage rates are updated and applied correctly. Automated systems flag potential non-compliance issues, like incorrect rates for apprentices or missed wage updates.
4. Deductions for Uniforms or Equipment
Deductions for uniforms, equipment, or other expenses can lower employees’ pay below the legal threshold. Audit these deductions carefully to ensure they don't result in non-compliance. Learn more about compliant deductions.
What to expect during a compliance check
If HMRC conducts a compliance check, it’s important to be prepared. Employers will be asked to provide detailed records of their payroll, employee classifications, and any deductions that may affect pay. The compliance check ensures that all workers are being paid at least the National Minimum Wage or National Living Wage, as required by law.
During the check, HMRC may review records for unpaid working time, apprentice pay, or salary sacrifices that inadvertently reduce pay below the NMW threshold. Employers found in violation can face fines and back payments to employees. To avoid these outcomes, it’s critical to keep accurate payroll records and conduct regular audits.
Watch the HMRC video to learn more about how compliance checks work and what steps you can take to ensure your business is ready.
If you need help with this, get in touch. We have helped a lot of businesses get ready for compliance checks.
How We Can Help Employers
At Crystal HR & Payroll Ltd, we specialize in helping businesses stay compliant with wage regulations, offering tailored services to streamline payroll and ensure accuracy. Here’s how we can assist you:
- Automated Payroll Software: Our advanced payroll systems update automatically with new wage legislation, minimizing the risk of errors.
- Compliance Audits: We regularly audit your payroll processes, ensuring salary sacrifice schemes, deductions, and employee classifications meet all NMW requirements.
- Employee Classification Assistance: We help ensure that apprentices, part-time, and full-time employees are correctly classified and paid accordingly.
By partnering with Crystal HR & Payroll Ltd, you can avoid costly mistakes and ensure your business is fully compliant with the 2024 National Minimum Wage regulations. Contact us today to find out more.
Streamline Compliance with Our Free NMW Checker
To help your compliance process, download our free NMW Checker. This tool helps calculate wage rates based on age and apprenticeship status, ensuring accurate payments and avoiding wage violations.
