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When you run a business, you’re not just an entrepreneur – you’re also someone’s employer.
As an employer, you have a legal duty to ensure your employees are treated fairly, including paying them the appropriate minimum wage. The national minimum wage sets the baseline for what all employees in the UK should earn on an hourly basis. For employers, understanding the minimum wage and their legal obligations around paying employees is essential for maintaining a compliant and responsible business.
Keep reading to learn more about your obligations as an employer regarding minimum wage in 2024.
What Is The Minimum Wage In The UK In 2024?
In the UK, the minimum wage is reviewed annually. Instead of being a fixed rate, the minimum wage is subject to change every April following a review by the Low Pay Commission. The new rate can be influenced by various factors, including the cost of living, demographic trends, economic conditions, social pressures, and more.
As of 2024, the national minimum wage rates are:
- National Living Wage (for workers aged 23 and over): £11.44 per hour
- National Minimum Wage (for workers aged under 23):
- Aged 21-22: £10.18 per hour
- Aged 18-20: £7.49 per hour
- Under 18: £5.28 per hour
- Apprentice Rate: £5.28 per hour (for apprentices under 19 or those aged 19 and over but in their first year of apprenticeship)
Do Employers Have To Pay Minimum Wage?
Yes, as an employer, you are legally obligated to pay your employees at least the minimum wage. Remember, this is just the minimum — it’s important to consider competitive salary rates if you want to secure the best talent.
Failing to pay your employees the national minimum wage is a breach of employment law. If you’re found in violation, you will face legal consequences, which may include significant fines, being required to pay back the wages owed to employees, and even potential court appearances.
That’s just the legal consequences. Your business could be in serious turmoil once people find out that you’ve been engaging in unlawful practices, deterring both workers and customers from interacting with your business. ion could deter both employees and customers from wanting to associate with your business. To avoid this, ensure you’re running a reputable business by paying your employees fairly and legally.
Additionally, if your failure to meet minimum wage standards is coupled with poor working conditions, it could lead to accusations of modern slavery. The penalties for modern slavery are much more severe and can cause irreparable reputational damage. To avoid this, ensure your employees are paid fairly, on time, and work under proper conditions.
What Steps Do I Need To Take When The National Minimum Wage Increases?
If the national minimum wage increases, it’s essential to review your Employment Contracts. If the wages specified in your employment contracts fall below the new minimum, you must make changes as soon as reasonably possible.
This involves discussing the changes with your employees, having your employment contracts reviewed and revised, and signing either the updated version of the agreement or a brand new one (depending on your circumstances).
As business picks up, it can be easy to overlook these updates. However, being too busy is no excuse for breaking the law. Even if you didn’t intend to underpay your employees or were unaware of the changes, you could still face serious consequences. That’s why it’s a good idea to implement an annual review process for your workplace policies, systems, and other employee-related matters. Consider drafting a comprehensive Workplace Policy to standardise this process and ensure you stay compliant.
Can An Employer Reduce Their Employees Wages?
An employer can only reduce their employees wages under certain circumstances. Firstly, they need to have reasonable grounds to justify this reduction and follow proper legal procedures. Reducing your employees wages simply because the national minimum wage is lowered isa pretty lage legal risk.
Typically, employers need to cite reasons that are necessary for business to reduce employees wages such as financial difficulties or restructuring. Even with good reason, employers are still required to seek an employee’s permission to reduce their wages – an employee’s wages cannot be reduced without their consent.
As an employer, if you do find yourself needing to lower your employees wages, it’s important to handle the situation with care. Give your employees ample notice, explain your reasons, don’t pressure them into agreeing to a new wage and if they do consent – make sure it’s in writing. It’s best to have a legal expert help you out with this process, that way you can ensure you do everything legally.
If An Employee Agrees, Can I Pay Them Less Than The Minimum Wage?
You can bring an employee’s wages down if they explicitly consent to it and you have reasonable business grounds to do so. However, you cannot pay an employee less than the national minimum wage, even if they agree to this.
Essentially, the national minimum wage is a law that applies to everyone – no exceptions. A contract cannot override the law. So, even if you do get an agreement stating the employee in question agrees to be paid an amount that is less than the national minimum wage, those terms will not be valid as they are illegal.
What Other Laws Do I Need To Look Out For As An Employer?
The national minimum wage is an important law to follow when you’re running a business however, it’s not the only one. When you have employees, there’s a number of legal obligations you have towards them. After all, a duty of care is not just an act of kindness, it’s a strict legal requirement.
Providing your employees with a safe workplace, ensuring they have the proper equipment, and maintaining a work environment free of hazards is essential for all employers. In addition, your workplace must be free from discrimination and support employees’ rights to breaks and leave. It’s equally important to ensure you’re providing payslips, making pension contributions, and following data protection procedures. Employees should also have a clear process for raising grievances — the list is pretty long.
Given these responsibilities, it’s crucial to consult with a legal expert. They can help ensure that your workplace is set up to support your employees and protect their rights, providing them with a stable and safe work environment.
Key Takeaways
Understanding the national minimum wage is one of the many legal responsibilities employers have towards their employees. As an employer, knowing your obligations is crucial in running a legally compliant business. To summarise what we’ve discussed:
- Employers are legally obligated to pay employees at least the national minimum wage, which varies by age and is reviewed annually
- The national minimum wage for 2024 is £11.44 per hour for workers aged 23 and over, with lower rates for younger employees and apprentices
- Failing to pay the minimum wage can lead to legal consequences, including fines, repayment of wages, and reputational damage
- Employers must review and update employment contracts if the minimum wage increases, ensuring compliance with the new rates
- Reducing wages requires employee consent, and employers cannot lower wages simply because the national minimum wage has decreased
- Employers cannot pay below the minimum wage, even if an employee agrees; doing so would breach employment law
- Employers also have broader obligations, such as providing a safe, discrimination-free workplace and following procedures for grievances, pensions, and data protection
If you would like a consultation on minimum wage, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.
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