New national minimum and living wage factsheet

Titel

Publicatiedatum

30/06/2016

Categorie

Payroll

Bron

HM Revenue & Customs

Aard

Nummer

Samenvatting

A new factsheet has been launched by HMRC entitled "Carrying out a self-review of the National Living Wage and the National Minimum Wage". The factsheet will be issued by HMRC as part of their checks to ensure that employees are being correctly paid the National Living Wage (NLW) and National Minimum Wage (NMW). The factsheet provides employers with instructions on how to self-review their records. The NLW and NMW are the minimum legal amounts that employers must pay their employees.

The size and scope of a self-review will depend on a number of factors such as:

the size of the workforce;
the number of workers that may not have been paid at least the correct rate of NLW and NMW;
changes to the NLW and NMW rates;
changes in the contracted hours or pay rates of your workers.

Once a review has been carried out, HMRC must be provided with a written summary highlighting the pertinent details. There are penalties for employers that are found to have underpaid their workers and in some cases there may be criminal prosecutions. However, HMRC will not issue a penalty to employers who fully identify and pay any NLW or NMW arrears as part of the self-review process.

The NLW is currently £7.20 per hour for those aged 25 or over. This represents an increase of 50p over the current NMW rate. The NMW will continue to apply for those aged under 25. The current NMW rates are; apprentices £3.30 per hour, under 18s £3.87 per hour, 18 – 20 £5.30 per hour over 20s £6.70 per hour. The hourly rate of the NMW will increase to £6.95 (a rise of 25p) for adults 21-24 year olds from 1 October 2016 with similar rises in the other NMW bands.

Carrying out a self-review of the National Living Wage and the National Minimum Wage

As part of our check into your payment of the National Living Wage (NLW) and the National Minimum Wage (NMW) to your workers, you have been asked by the officer undertaking the check to carry out a self-review of your records. This factsheet gives you more information about what you need to do.

The NLW and NMW is the minimum legal amount that employers must pay their workers and you are responsible for making sure that your workers are paid at least NLW and NMW rates.

How to carry out the self-review

How to decide the pay periods to review

The size and scope of your review will depend on a number of factors. These can include:

· the size of your workforce

· the number of workers you believe may not have been paid at least the correct rate of NLW and NMW

· changes to the NLW and NMW rates

· changes in the contracted hours or pay rates of your workers

Using these factors will help you decide which pay reference periods you need to review and how far back your review needs to go.

What to do if I identify an underpayment of NLW or NMW

If you find that you’ve not paid the correct amount of NLW and NMW during the period covered by your self-review, you need to widen the scope of your review to include other periods until you are satisfied that there is no longer a risk that any of your workers have been incorrectly paid.

This may mean that you have to widen the review for selected workers or increase the percentage of workers covered by the review. For example, if you check the payments made to half your workforce and find that a large number of workers have not been paid the NLW or the NMW, then you should expand your review to cover all of your workforce.

How to calculate arrears of NLW or NMW

You must treat each pay reference period separately when you work out whether the NLW or the NMW has been paid. This means that if you have paid more than the NMW in one pay period you may not be able to offset that overpayment against an underpayment in another pay period.

To work out what has happened you must first identify the type of work your workers are doing. For example are they:

· paid by the hour

· paid an annual salary

· paid per task or piece of work done

· paid in other ways

You can find more information about the types of working contracts on our website. Go to

www.gov.uk/minimum-wage-different-types-work

When you calculate underpayments for your workers you should bear in mind that for pay reference periods prior to the current rates of the NLW or the NMW being implemented, you need to uplift the underpayment to the current rate of NLW or NMW. To do this you need to apply the following calculation (A/B) x C, where:

· A is the amount of underpayment identified

· B is the rate of the NLW or NMW at the time

· C is the current rate of the NLW or NMW

NMW2-FS2 1 HMRC 03/16

For more information on how arrears are calculated, including any increase, go to www.gov.uk/minimum-wage-calculator-employers

You can also find more information about how to calculate the minimum wage at www.gov.uk/government/publications/calculating-the-minimum-wage

What happens next

Once you have completed the self-review you must give us a written summary showing the:

· names and addresses of any underpaid workers

· amount of arrears for each worker and the pay period(s) concerned

· date you paid the arrears

· payment method you used to pay the arrears and let us have evidence of this, such as copies of cheques; bank statements or Bacs (Bankers’ Automated Clearing System) notification of payment; or a signed receipt from the worker

Any arrears that you fully identify and pay as part of the self-review process will not attract a penalty or fall under the Department for Business, Innovation and Skills’ current naming policy. You can find more information about this in the letter that accompanies this factsheet.

Record keeping

You must keep details of the method, size and scope of your review and the calculations you’ve used, together with all supporting information. If we need to carry out a further NLW or NMW check, you will need to let us have this information.

Your adviser

If you want to appoint an adviser to act on your behalf, you will need to send us a form 64-8 ‘Authorising your agent’. To complete the form online, go to www.gov.uk and search for ‘64-8’.

If you prefer, you can get a form 64 -8 by phoning us on the number at the top of the accompanying letter or our orderline on 0300 200 3610.

Your rights and obligations

‘Your Charter’ explains what you can expect from us and what we expect from you. For more information, go to www.gov.uk/hmrc/your-charter

To check current and past rates of the NLW or the NMW, go to www.gov.uk/national-minimum-wage-

rates

More information

If you want more information:

· phone us on the number on our covering letter

· go to www.gov.uk/national-minimum-wage

The Department for Business, Innovation and Skills (BIS) produces detailed guidance about the NMW:

· go to www.gov.uk and search for ‘National Minimum Wage’ or ‘National Living Wage’

· phone 020 7215 5000

The Acas Helpline provides free, confidential advice in over 100 languages. You can phone Acas on 0300 123 1100.

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