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National Minimum Wage/National Living Wage: Payroll FAQs

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Article Name

National Minimum Wage/National Living Wage: Payroll FAQs

Created Date

20th April 2020


IRIS PAYE-Master, IRIS Payroll Business, IRIS Bureau Payroll, IRIS GP Payroll, IRIS Payroll Professional, Earnie, IRIS Earnie IQ


National Minimum Wage & National Living Wage rates for the 20/21 are as follows:

The new rates are:

National Minimum Wage
Apprentice Rate Under 19: £4.15
Apprentice Rate Year 1: £4.15
Age 16 & 17: £4.55
Age 18 to 20:  £6.45
Age 21 to 24: £8.20

National Living Wage
Age 25+: £8.72


It is also important to consider other common payroll related mistakes that should be avoided.  These include:

• Including tips, gratuities, service charges and cover charges as part of minimum wage pay.  They do not count even if they are administered through payroll and they shouldn’t be included when calculating minimum wage pay for employees.

• Including premium rates of pay as part of minimum wage pay. An employer may pay a worker at a higher rate than their standard pay rate for some of the work they do, for example, overtime or night shifts.  However, this premium element of pay, which exceeds the worker’s basic rate, does not count towards minimum wage pay because it is not guaranteed income;

• Making wage deductions for items or expenses that are connected with the job such as uniforms; this will reduce a worker’s pay for minimum wage purposes.

In any given pay period a worker’s pay must not fall below the National Minimum Wage rate. An employer who fails to ensure this could be faced with financial penalties and may be named and shamed in a government press release.

To find out more about the National Minimum Wage please read the HMRC guide for employers.

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