With government adverts on mobile gaming apps encouraging workers to check they are being paid correctly, employers should be extra vigilant in ensuring their compliance with the recent increases to National Minimum Wage.

Last week the Department of Business, Energy and Industrial Strategy (BEIS) launched a targeted advertising campaign on mobile gaming apps to raise awareness of the new National Minimum Wage (NMW) and National Living Wage (NLW). The increased rates came into effect on 1 April 2022 and are set to benefit an estimated 2.5 million people.

What will the adverts look like?

15 second adverts will be running on popular gaming apps such as Angry Birds, The Sims and FIFA and include a direct link to the government website’s check your pay page. The aim of the campaign is to encourage young people, the demographic most likely to benefit from the increased rates, to check that they are being paid the correct wage by their employers.

What will this mean for employers?

Wider awareness of the new rates is likely to result in more pay-related complaints to HMRC. Every call made to HMRC from a worker claiming to be underpaid will lead to an HMRC NMW Employer Inspection, with or without evidence to support the claim.

If you are an employer who is found to be underpaying your workers, you face:

  • Reimbursement of the underpaid workers – the total amount can be backdated for up to six years if eligible, and underpayments are uplifted to the current NMW rate
  • A substantial financial penalty; 200% of the total underpaid, reducing to 100% if the underpayment is fully repaid within 14 days
  • A damaged reputation when HMRC name your company publicly for paying less than minimum wage

In 2021, more than 200 firms were named and shamed for breaking laws surrounding National Minimum Wage. Collectively, they were forced to pay £1.2 million to workers, in addition to financial penalties to the government.

What are the new National Minimum Wage and National Living Wage rates?

23+ (NLW) 21 to 22 18 to 20 Under 18 Apprentice
New rates effective from 1 April 2022 £9.50 £9.18 £6.83 £4.81 £4.81
Previous rates £8.91 £8.36 £6.56 £4.62 £4.30

 

What are the potential pitfalls for employers?

Some of the issues that employers get inadvertently caught out with include:

  • Failing to pay NMW at the appropriate age rate for apprentices after they have completed the first 12 months of their apprenticeship
  • Failing to pay all training time
  • Failing to pay working travel time, or set up/set down time if required
  • Failing to recognise deductions from gross or net pay that reduce the rate of pay for NMW purposes
  • Incorrectly including allowances or enhanced overtime rates in the NMW calculation
  • Failure to keep appropriate records to evidence compliance with NMW Legislation

If you would like more guidance and support regarding the National Minimum Wage increase, our specialist Employment Tax team are experienced in helping clients stay compliant with changes in HMRC’s NMW working practice. Contact us today to find out more about the variety of tax services we offer.