The way you calculate holiday pay for your employees may need to change to allow for recent court judgements indicating a change in legislation will soon follow.

ACAS have detailed guidance on their website (www.acas.org.co.uk) but we have summarised the key points below;

An employee should receive holiday pay based on a week’s normal remuneration, whatever that may be to them, not just on their contracted basic hours (unless that is all they work)

The following payments should now be considered when calculating statutory holiday pay

Guaranteed and non-guaranteed overtime (currently there is no case law suggesting voluntary overtime needs to be taken into account)


                Work-related travel

                Other regular payments (e.g bonuses)

It is suggested that holiday pay for those employees with various payments to be included in the calculation is worked out based on an average of 12 weeks of earnings. These weeks should not include nil paid periods or periods of statutory payment.


Also a reminder that employees are entitled to 5.6 weeks holiday per year in the UK. This must be taken and cannot be paid in lieu. Only holidays provided by the employer above the statutory allowance can be paid in lieu if stipulated in the employment contract.

If you require any further information please do not hesitate to contact our office on 03333 202 409 or 01472 345888.             

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All employees must note that as from October 2016 the new National Minimum Wage will be increasing as follows:-

21 to 24 year olds from £6.70 to £6.95 ph
18 to 20 year olds from £5.30 to £5.55 ph
16 to 17 year olds from £3.87 to £4.00 ph
Apprentices from £3.30 to £3.40 ph
The National Living Wage is to remain at £7.20 per hour.

For any further information please contact our Payroll Manager Rebecca Germaney on 01472 345888.

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The Pension Regulator (TPR) has fined Swindon Town £22,900 after it failed to put eligible workers into a pension scheme.
Charles Counsell,  for TPR said
"This case illustrates what can happen when an employer buries their head in the sand and disregards their duties. Failing to comply on time will not save you money. Not only do you risk a fine, you will also have to make back dated contributions".
Contact us today we can sort out all your
Auto-Enrolment Pension requirements.
Can you really afford not to.
01472 345888

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National living wage (NLW)

1. About the new national living wage

The government wants to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.

With record employment, the highest GDP growth in the G7, over 2 million jobs created since 2010, and 1.1 million more forecast by the Office for Budget Responsibility (OBR), the government believes that now is the right time to take action to ensure low wage workers can take a greater share of the gains from growth.

The new national living wage is an essential part of this. It ensures that work pays, and reduces reliance on the state topping up wages through the benefits system.

2. Rates

From April 2016, the government will introduce a new mandatory national living wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 50p relative to the current National Minimum Wage (NMW) rate. That’s a £910 per annum increase in earnings for a full-time worker on the current NMW.

The adult NMW rate is currently £6.70. From 1 April 2016 the premium will come into effect on top of the NMW, taking the national living wage to £7.20. The NMW will continue to apply for those aged 21 to 24, with the premium added on top for those aged 25 and over, taking the total hourly rate to the national living wage.

3. Low Pay Commission and future rates

The government published the Low Pay Commission’s (LPC) new remit on 8 July 2015. The government has asked the LPC to recommend the level of the path of the national living wage going forward, with the target of the total wage reaching 60% of median earnings by 2020. On OBR forecasts a full-time NMW worker will earn over £4,800 more by 2020 from the NLW in cash terms.
The LPC will also continue to provide recommendations for the other NMW rates as they have done previously.

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National Minimum Wage and National Living Wage

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker's age and if they are an apprentice. Any changes to the rate are normally introduced in October each year.

Key points

  • Most workers over school leave age will be entitled to receive the NMW.
  • The NMW rate is reviewed annually by the Low Pay Commission.
  • The minimum rate depends on the age of the worker.
  • HM Revenue &Customs (HRMC) can take employers to court for not paying the NMW.
  • There are a number of exemptions to those who receive the NMW. These do not relate to the size of the business, sector, job or region.
  • The compulsory National Living Wage is the national rate set for people aged 25 and over.
The rates from 1st October 2015 are:
  • £6.70 for workers 21 and over
  • £5.30 18-20 yrs
  • £3.87 for 16-17 yrs, who are above school leaving age but under 18
  • £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.
It is important to note that these rates, which come into force 1 October 2015, apply to pay reference periods beginning on or after that date.


There are a number of people who are not entitled to the NMW.
  • Self-employed people.
  • Volunteers or voluntary workers.
  • Company directors.
  • Family members, or people who live in the family home of the employer who undertake household tasks.
All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

Agricultural Wages

Agricultural and horticultural workers in England employed after 1st October 2013 must be paid the appropriate NMW rate (see above).
Workers who were already employed before 1 October 2013 will still be entitled to the same terms and conditions set under their contract of employment; this may include overtime rates, agricultural wages, sick pay or dog allowance. DEFRA will continue to enforce complaints made by workers in respect of underpayments or non-compliance with terms and conditions of an Agricultural Wages Order before 1 October 2013 for up to six years after the breach occurred.
For agricultural workers in Scotland there is no change, and in Wales workers must be paid at least the Agricultural Minimum Wage, or the NMW if that's higher.

Family member exemption

For this exemption to apply, workers must either be a member of the employer's family, or live in the employers' family home.
Either the worker is a member of the employer's family and:
  • resides in the family home of the employer.
  • shares in the tasks and activities of the family.
Or the worker resides in the family home of the employer, and:
  • is not a member of that family, but it treated as such (in regards to the provision of living accommodation, meals and the sharing of tasks and leisure activities)
  • is neither liable to any deductions, nor to make any payment to the employer, or any other person, as respects the provision of the living accommodation or meals.
  • if the work had been done by a member of the employer's family, it would not be treated as work.

Non-payment of the NMW

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records.
If an employer doesn't pay the correct rate, a worker should talk to their employer and try to resolve the issue informally first. If this doesn't work a worker may make a formal grievance to their employer.
A worker can make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn't paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to the worker.

The National Living Wage

A compulsory National Living Wage is due to be introduced on 1st April 2016 for all working people aged 25 and over, and will be set at £7.20 per hour. The current National Minimum Wage for those under the age of 25 will continue to apply.

Who will be entitled to the National Living Wage?

Generally all those who are covered by the National Minimum Wage, and are 25 years old and over, will be covered by the National Living Wage these include:
  • employees
  • most workers and agency workers
  • casual labourers
  • agricultural workers
  • apprentices who are aged 25 and over.

Penalties for failure to comply

With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.
The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

The Low Pay Commission

The Low Pay Commission which currently recommends the level of the minimum wage will recommend any future rises to the National Living Wage rate.

The Living Wage

The new National Living Wage is different from the Living Wage, which is an hourly rate of pay and updated annually. The Living Wage is set independently by the Living Wage Foundation and is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis.

Working Time Directive - Mobile workers - September 2015

The European Court of Justice in a recent case gave the judgement that mobile workers who have no fixed place of work, and spend time travelling from home to the first and last customer, should have this time considered as working time. The Court add that because the workers are at the employer's disposal for the time of the journeys, they act under their employer's instructions and cannot use that time freely to pursue their own interest.
Acas is assessing the impact of this judgement on workers and employers in Great Britain, including whether it has any effect on the payment of the National Minimum Wage, and will provide more detailed guidance when it is available.

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