National Minimum Wage: Why Paying Above the Hourly Rate Isn’t Always Enough

Apprentices: the rate doesn’t always last the whole apprenticeship

The apprentice rate only applies to apprentices who are under 19, or who are 19 or over and in the first year of their apprenticeship. Once an apprentice is 19 or over and has completed that first year, they’re entitled to the full minimum wage rate for their age.

In practical terms, this means a 20-year-old starting a two-year apprenticeship can be paid £8.00 an hour in year one, but must move to at least £10.85 an hour from the start of year two.

Training time counts too. Time spent at college or completing required apprenticeship training forms part of the hours that need to be paid at the correct rate, not just time spent in the workplace.

What happens if HMRC finds an underpayment

It’s the employer’s responsibility to make sure the rules are being met, and HMRC can look back over several years of pay when it checks. If it finds an underpayment, the employer can be required to:

• pay arrears to every worker affected, calculated at today’s rates where those are higher;
• pay a penalty of up to 200% of the arrears, capped at £20,000 per worker; and
• face being publicly named by the government, which can do far more damage than the bill itself.

The penalty is halved if the arrears and penalty are paid within 14 days, so acting quickly makes a real difference.

Running payroll through an accountant doesn’t transfer that responsibility. Payroll is processed at the rate you provide, and your payroll provider won’t necessarily know how many hours someone actually works, what happens outside their contracted hours or what arrangements you have with them.