National Minimum Wage and National Living Wage

The charity must ensure that it pays workers the National Minimum Wage (NMW) or National Living Wage (NLW) as appropriate. The NMW is updated in October each year and the NLW is updated every April.

Both the NMW and NLW have increased from April 1 2021 and, for the first time, the NLW will also be given to 23 and 24-year-olds. The increases mean that:

  • National Living Wage (23+) has increased 2.2%, from £8.72 to £8.91
  • National Minimum Wage (21-22) has increased 2%, from £8.20 to £8.36
  • National Minimum Wage (18-20) has increased 1.7% from £6.45 to £6.56
  • National Minimum Wage (under 18) has increased 1.5% from £4.55 to £4.62
  • Apprentice Rate has increased 3.6% from £4.15 to £4.30

More information can be found online.

The charity must not make deductions from employees’ pay that would take their pay below the NMW/NLW, even if the employee agrees to it, except if the deduction is for:

  • Tax or NICs
  • Something the employee has done and their contract of employment says they are liable for, e.g. a shortfall in a till if the employee works in a shop
  • Repayment of a loan or advance of wages
  • Repayment of an accidental overpayment of wages
  • Buying shares or share options in the business
  • Accommodation provided by the charity (subject to the accommodation offset rate, the daily accommodation offset rate is £8.36 and the weekly rate is £58.52. – see more details here). If an employer charges more than the offset rate, the difference is taken off the worker’s pay which counts for the NMW or NLW. If the accommodation charge is at or below the offset rate, it does not have an effect on the worker’s pay. If the accommodation is free, the offset rate is added to the worker’s pay.
  • The employee’s own use, e.g. pension contributions

A National Minimum Wage and Living Wage calculator for employers, can be found here.

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