If you have employed (not self-employed) staff, it’s important to keep updated with HMRC changes and one of the most recent changes is the minimum wage increase from April 2023. This was announced in the Chancellor’s Autumn statement and will impact on thousands of employers.
The new minimum wage rate will be £10.42 an hour (up from £9.50) for workers aged 23 or over; £10.18 an hour for those aged 21-22; £7.49 an hour for 18 to 20-year-olds; £5.28 an hour for apprentices. HMRC are clear that, ‘an employer cannot exclude or limit the payment of minimum wage within any type of contract. Likewise, a worker cannot agree to be paid less than the minimum wage or to be unpaid.’
As an employer you are legally obliged to pay the minimum wage – there are penalties if you don’t. I am often asked whether, for example, childminder assistants can be self-employed, or if employers need to pay staff for attending out of hours staff meetings, first aid courses etc. It’s easy to make mistakes, so I usually signpost the ACAS website: https://www.acas.org.uk/ - phone number: 0300 123 1100 - where you can get free, impartial advice.
Some important things to note:
**It’s important to know the rules around self-employment for childminder assistants. If your assistant is needed by the business (not free to work elsewhere because they are tied to ratios, for example) then HMRC state that you need to employ them.
**You must give your staff member a contract which sets out their work terms and conditions including wages. Legally, since 1 April 2020, you have to give all new employees a contract on their first working day in the setting.
**You must give your staff member a pay slip every month, detailing their wage plus any additional payments you have made, such as overtime and holiday or sick pay.
**Overtime cannot be included as part of the minimum wage – it must be stated separately on the pay slip.
**If you require staff to have an Ofsted home-based DBS as a pre-requisite for working in your childcare setting then the cost of the DBS will not reduce their minimum wage because it must be purchased before they start working for you. However, if you ask them to get the DBS while they are employed or to pay for the annual DBS update service and that cost takes them below minimum wage, you have to pay it for them.
**If you ask staff to attend or do training outside their normal hours of work, you must pay them to attend as well as paying for the training – even if they are doing training at home in their own time.
**Money or gifts given to staff by parents do not count towards their minimum wage payment. You will find more examples of how to calculate the minimum wage and what counts as payments here –
https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage.
**You cannot deduct things like childcare charges from a staff member’s wage – you have to pay them minimum wage and then send them an invoice. This is not the same thing as a salary sacrifice scheme to pay, for example, childcare vouchers or tax free childcare to another setting the child attends.
**You might have a statement in your staff contract that talks about employees paying back statutory training costs (paediatric first aid and / or safeguarding) if they leave within a certain time. HMRC state: ‘If a deduction is made from a worker’s final payments, it will still be considered in the normal way to assess whether or not the worker is receiving minimum wage pay. For example, if an employer makes a deduction from a worker in their final pay for mandatory training undertaken throughout the employment, the deduction will still be considered in the same way as in any other pay reference period. If the deducted amount reduces the worker’s pay below minimum wage rates for that pay period, the worker will be underpaid.’ However, this might not be the case if the employee took a loan to do a voluntary course while employed by you – I advise you to take legal support before setting up this sort of arrangement.
**The national minimum wage must be paid for ‘time worked’ so if you are asking staff to come in early to set up a room or to be ready to start working for 9am then they have to be paid for that time – they are in work and working.
**You must provide PPE (personal protective equipment) such as masks and gloves for your staff if requested. This is because, if you ask them to pay, the payment will take them below minimum wage.
**If you pay a staff member minimum wage plus extra because they are the safeguarding lead, this doesn’t mean you can say they are on more than the minimum wage per hour – the way HMRC look at it, they are on the minimum wage plus extra to be the DSL which is a role with extra responsibilities.
**If you expect your staff to wear certain clothes – and buying those clothes takes them below the minimum wage – then you have to provide them. You are entitled to set a ‘reasonable limit’ for costs and might want to state that staff should buy generic items of clothing to keep the cost reasonable.
**If you expect your assistant to drive for the business – for example, collecting children from school or taking them to playgroup in their own vehicle, you will need to pay for any extra business class 1 insurance premium they are charged. Also note that if your employee is using their own car for business use (driving childminded children), it might not be covered by their rescue company so that will need to be checked and extra payments might need to be made.
**You cannot charge staff out of their wages for any food you provide for them during the working day. If you expect them to pay for food, you must charge them after they have received the minimum wage in their pay.
**If you have questions about holiday pay or sick pay, I always advise a call to ACAS -
https://www.acas.org.uk/checking-sick-pay/sick-pay-and-holiday-pay.
Note that if you do anything, as an employer, that takes the staff member’s wage below minimum wage, you are acting illegally because wage rates are protected by law. You will find more guidance on how to calculate the minimum wage here –
https://www.gov.uk/guidance/calculating-the-minimum-wage.
I hope you find this useful. Any questions? Please contact ACAS for further clarification.
All the best, Sarah.
The new minimum wage rate will be £10.42 an hour (up from £9.50) for workers aged 23 or over; £10.18 an hour for those aged 21-22; £7.49 an hour for 18 to 20-year-olds; £5.28 an hour for apprentices. HMRC are clear that, ‘an employer cannot exclude or limit the payment of minimum wage within any type of contract. Likewise, a worker cannot agree to be paid less than the minimum wage or to be unpaid.’
As an employer you are legally obliged to pay the minimum wage – there are penalties if you don’t. I am often asked whether, for example, childminder assistants can be self-employed, or if employers need to pay staff for attending out of hours staff meetings, first aid courses etc. It’s easy to make mistakes, so I usually signpost the ACAS website: https://www.acas.org.uk/ - phone number: 0300 123 1100 - where you can get free, impartial advice.
Some important things to note:
**It’s important to know the rules around self-employment for childminder assistants. If your assistant is needed by the business (not free to work elsewhere because they are tied to ratios, for example) then HMRC state that you need to employ them.
**You must give your staff member a contract which sets out their work terms and conditions including wages. Legally, since 1 April 2020, you have to give all new employees a contract on their first working day in the setting.
**You must give your staff member a pay slip every month, detailing their wage plus any additional payments you have made, such as overtime and holiday or sick pay.
**Overtime cannot be included as part of the minimum wage – it must be stated separately on the pay slip.
**If you require staff to have an Ofsted home-based DBS as a pre-requisite for working in your childcare setting then the cost of the DBS will not reduce their minimum wage because it must be purchased before they start working for you. However, if you ask them to get the DBS while they are employed or to pay for the annual DBS update service and that cost takes them below minimum wage, you have to pay it for them.
**If you ask staff to attend or do training outside their normal hours of work, you must pay them to attend as well as paying for the training – even if they are doing training at home in their own time.
**Money or gifts given to staff by parents do not count towards their minimum wage payment. You will find more examples of how to calculate the minimum wage and what counts as payments here –
https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage.
**You cannot deduct things like childcare charges from a staff member’s wage – you have to pay them minimum wage and then send them an invoice. This is not the same thing as a salary sacrifice scheme to pay, for example, childcare vouchers or tax free childcare to another setting the child attends.
**You might have a statement in your staff contract that talks about employees paying back statutory training costs (paediatric first aid and / or safeguarding) if they leave within a certain time. HMRC state: ‘If a deduction is made from a worker’s final payments, it will still be considered in the normal way to assess whether or not the worker is receiving minimum wage pay. For example, if an employer makes a deduction from a worker in their final pay for mandatory training undertaken throughout the employment, the deduction will still be considered in the same way as in any other pay reference period. If the deducted amount reduces the worker’s pay below minimum wage rates for that pay period, the worker will be underpaid.’ However, this might not be the case if the employee took a loan to do a voluntary course while employed by you – I advise you to take legal support before setting up this sort of arrangement.
**The national minimum wage must be paid for ‘time worked’ so if you are asking staff to come in early to set up a room or to be ready to start working for 9am then they have to be paid for that time – they are in work and working.
**You must provide PPE (personal protective equipment) such as masks and gloves for your staff if requested. This is because, if you ask them to pay, the payment will take them below minimum wage.
**If you pay a staff member minimum wage plus extra because they are the safeguarding lead, this doesn’t mean you can say they are on more than the minimum wage per hour – the way HMRC look at it, they are on the minimum wage plus extra to be the DSL which is a role with extra responsibilities.
**If you expect your staff to wear certain clothes – and buying those clothes takes them below the minimum wage – then you have to provide them. You are entitled to set a ‘reasonable limit’ for costs and might want to state that staff should buy generic items of clothing to keep the cost reasonable.
**If you expect your assistant to drive for the business – for example, collecting children from school or taking them to playgroup in their own vehicle, you will need to pay for any extra business class 1 insurance premium they are charged. Also note that if your employee is using their own car for business use (driving childminded children), it might not be covered by their rescue company so that will need to be checked and extra payments might need to be made.
**You cannot charge staff out of their wages for any food you provide for them during the working day. If you expect them to pay for food, you must charge them after they have received the minimum wage in their pay.
**If you have questions about holiday pay or sick pay, I always advise a call to ACAS -
https://www.acas.org.uk/checking-sick-pay/sick-pay-and-holiday-pay.
Note that if you do anything, as an employer, that takes the staff member’s wage below minimum wage, you are acting illegally because wage rates are protected by law. You will find more guidance on how to calculate the minimum wage here –
https://www.gov.uk/guidance/calculating-the-minimum-wage.
I hope you find this useful. Any questions? Please contact ACAS for further clarification.
All the best, Sarah.