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Topic: Pay and pensions

letter advising of NMW rate increase - due to age
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Letter advising of NMW rate increase - due to age

Letter advising of NMW rate increase (due to age)

The national minimum wage (NMW) is paid according to an employee's age. So a birthday can mean that they're entitled to a present from you in the shape of a pay rise! You should always write to them about the change and why it's happened. Use our letter for this purpose.

How old are you?

The NMW must be paid according to an employee's age. The rates are reviewed each year and usually increase in line with inflation.

It's my birthday!

It's particularly important that you keep track of the ages of younger employees; a birthday can easily move them into the next NMW band. It's your responsibility to ensure that the correct rate of NMW is being paid, not theirs - so regular checks will protect you here. If an employee is entitled to a higher rate of pay due to a change in age, it must be paid from the start of the next pay reference period on or after their birthday; any failure to do this could result in a complaint to HMRC. It has the power to investigate any employer it believes to be flouting NMW rules and impose a fine.

When you increase NMW rates due to age, you should write to the employee explaining what has happened and why. You can use our Letter Advising of NMW Rate Increase (Due to Age) for this purpose. This will avoid any misunderstandings.

Tip. If you accidentally miss a rate increase, simply backdate the outstanding amount and pay it to the employee immediately. Then they'll hopefully have nothing to complain about.

 

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