The National Minimum Wage (NMW) and National Living Wages (NLW) have increased and this means that from the 1st of April 2024, all employees must be paid at the minimum rate or above for hours worked. 

Additionally, the National Living Wage now applies to the over 21's whilst previously employees had to be 23 to qualify. The rates, which came into effect on the 1st of April 2024, are as follows: 

Where employees are paid an annual salary their monthly salary must equate to paid for hours worked in the month and  this may vary dependent on number of working days there are in the month. 

For example: 

• Eight hours per day x 22 days in April = £2,013.44

• Eight hours per day x 21 days in March = £1,921.92 

If a salary is incorrectly calculated on an annual basis, there could be a breach of contract for salary paid which falls below NMW. If you wish to pay a salary split over 12 months, you may need to change their contract to illustrate your salary is based on annual hours. 

Employers need to ensure that the total compensation received by employees, including any benefits obtained through salary sacrifice arrangements, meets or exceeds the applicable national minimum wage requirements. If the salary sacrifice reduces an employee's cash wage below the minimum wage threshold, the employer may be in violation of labor laws. 

Employment benefits that are often deducted under salary sacrifice and should be given careful analysis include pension contributions, private medical insurance contributions and company car contributions. In addition to these, other ancillary benefits must be taken into account if they are included in the employee's total remuneration package, such as employer provided accommodation, uniform costs and training or travel expenses. These are commonly overlooked, and employers must ensure their compliance with minimum wage laws when providing any benefits. 

In addition, from April 2025, employers completing Real Time Information (RTI) returns will be required to provide HMRC with the number of hours paid for each employee within that pay period where that information is not held. Where that information is not held, employers will be required to provide the reason with reference to a specific description set out in the regulations. It is advisable to start making preparations to provide this information to us in readiness for April 2025. 

How we can help: 

If you have questions regarding the above changes and how they affect you as an employer, our dedicated Payroll team at Shaw Gibbs will be glad to assist you. Please contact Smita Patel for further assistance or information.