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National Minimum Wage (NMW) and National Living Wage (NLW)

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National Minimum Wage (NMW) and National Living Wage (NLW)

Category of worker

Hourly rate


Aged 25 and above (NLW rate)



Aged 21 to 24 inclusive



Aged 18 to 20 inclusive



Aged under 18 (but above compulsory school leaving age)



Apprentices aged under 19



Apprentices aged 19 and over, but in the first year of apprenticeship



Penalties for non-compliance

The penalties imposed on employers that are in breach of the National Minimum Wage Regulations may be up to 200% of the arrears owed to workers. The maximum penalty that can be applied is £20,000 per worker. These penalties can be reduced by 50% if the unpaid wages and penalties are paid within 14 days. HMRC also name and shame employers who are penalised.

Consultation on National Minimum Wage and Salary Sacrifice

It was announced in the press in January 2019 that retailer Iceland may have become the latest business to fall foul of the rules regarding NMW / NLW.

Iceland could be fined due to deductions made from employees’ pay to contribute to their Christmas Club scheme, a voluntary scheme aimed at helping employees save for the festive season. 

Under the scheme, sums are deducted from participating employees’ wages and paid back to them later. The monies deducted were then kept in a separate bank account managed by independent trustees, and employees could reclaim their cash at any time.

At the time of going to press the government is still consulting on NMW and salary sacrifice schemes.

If an individual is paid NMW / NLW then any deduction from pay, whether voluntary or not, could be a breach and it is the employers’ responsibility to ensure all members of their team are paid the correct rate of pay for their age so care should be taken.

As the Iceland story highlights, even voluntary deductions from the employees pay can be deemed a breach of the NMW regulations.

A salary sacrifice auto enrolment deduction would be a breach of NMW / NLW. As the minimum contribution percentages are increasing to 5% from 6 April 2019 it is important that these areas are reviewed to ensure you remain compliant.

If you have any queries regarding this, then please do not hesitate to contact your local payroll office.

Duncan & Toplis

Duncan & Toplis was established in 1925 and has 11 offices throughout the East Midlands: in Boston, Grantham, Lincoln, Loughborough, Louth, Melton Mowbray, Newark, Skegness, Sleaford, Spalding and Stamford. The group offers accountancy, tax and business advice, audit and assurance services, HR, Payroll, wealth management, IT services, legal and probate services and provides business turnaround support to SMEs.

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