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National Minimum & Living Wage Increases April 2020

National Minimum & Living Wage increases April 2020

Beauty and hair businesses see the National Living Wage (NLW) rise by 6.2% on April 2020, which the government says is the biggest cash increase ever’.

This rise is more than 4 times the rate of inflation, and takes hourly pay for over 25 salon employees from £8.21 to £8.72 from 1st April.

Based on a 35 hours week that is a £930 increase in annual earnings from April (£8.72) versus the 2018/19 NLW rate (£8.21).

The new National Minimum Wage (NMW) rates increase at the same time so remember to change all your payroll.

In this blog I run through:

  • the increased rates from 1 April 2020
  • what hair and beauty apprentices must be paid
  • show you how to avoid the traps which can lead to your business being publicly ‘named and shamed’.

But first:

What’s the difference between National Minimum Wage and National Living Wage?

What is the difference between the two?

And which should you be paying your salon team?

This depends on a person’s age and whether they are an apprentice.

Let me explain:

The National Minimum Wage (NMW)

Is the minimum pay per hour most workers aged under 25 are entitled to. I’ve set out the new NMW rates from 1 April 2020 below.

The National Living Wage

This only applies to your salon employees who are aged 25 and over. The new NLW rates from 1 April 2020 are set out below.

So what’s the bottom line for your salon or clinic this April?

At-a-glance:

Minimum Wage & Living Wage rates from 1st April 2020 for beauty and hair industry employees:

25 and over: £8.72
21 to 24: £8.20
18 to 20: £6.45
Under 18: £4.55
Apprentice: £4.15

 

1. New Minimum & Living Wage Rates 1st April 2020

Increases from 1st April 2020:

Old rate 1 April 2019New rate 1 April 2020
25 and over£8.21£8.72
21 to 24£7.70£8.20
18 to 20£6.15£6.45
Under 18£4.35£4.55
Apprentice£3.90£4.15

This equates to:

  • A 6.2% increase from £8.21 to £8.72 for over 25s
  • A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
  • A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
  • A 4.6% increase from £4.35 to £4.55 for Under 18s
  • A 6.4% increase from £3.90 to £4.15 for salon Apprentices

 

2. Paying hair & beauty apprentices the right Minimum Wage

It is very easy to get this wrong and find your hair or beauty salon on the government’s ‘named and shamed’ list.

Salon apprentices are entitled to the apprentice rate (£4.15 from 1st April 2020) if they’re either:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

But apprentices are entitled to the Minimum Wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

How does this affect your salon or spa business?

Here’s an example:

A salon apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.15 (from 01/04/20).

BUT

A salon apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.20 (from 01/04/20).

So think through the financial implications if you take on a slightly older apprentice.

Remember:

This higher rate applies even if you still refer to them as ‘an apprentice’.

 

3. What’s the Minimum Wage for salon Saturday assistants?

Employees must be at least school leaving age (last Friday in June of the school year they turn 16) to get the National Minimum Wage. Anyone under this age is not entitled to the NMW.

 

4. What count as ‘working hours’ for hair & beauty employees?

Don’t get caught out.

Many failures to pay the correct minimum wage are because the salon owner hasn’t understood the exact hours ‘worked’ and taken those extra minutes and hours into account…

When calculating the number of hours worked for NMW and NLW you must include all time spent:

At the salon and required to be working

This includes any downtime when your beauty or hair employees don’t have clients, even if they are on standby in the team room or  in a nearby coffee shop (but don’t include rest breaks that are taken).

Equipment breakdown

Include any time they are not working because of equipment breakdown, but are kept at the salon.

At the salon but not ‘working’

For example, waiting to collect deliveries, meeting someone for work or starting a job.

Travelling on salon business

Travelling in connection with work, including travelling from one work assignment to another. If you have employees visiting hair & beauty clients at home watch out for this one. Or if your team travel between locations within your salon group.

Pay NMW and NLW for training

Did you know the hours spent training (and travelling to training) all have to be counted?

It’s easy to make a mistake especially with salon apprentices who have outside training commitments.

These hours don’t count:

  • travelling between home and work
  • away from work on rest breaks, holidays, sick leave or maternity leave
  • on industrial action

 

5. Exemptions to the Minimum and Living Wage

But I only have one salon employee…

Surely the NMW and NLW rates don’t apply to me?

There are no exemptions according to the size of business, so even if you only have one employee in your hair or beauty business by law you must pay the relevant minimum wage rate.

There are a number of people who are not entitled to the National Minimum or Living Wage and these include:

  • self-employed people
  • volunteers
  • company directors

All other hair and beauty workers including commission workers, agency workers, part-time workers and casual workers must receive the relevant minimum wage.

 

6. What payments count towards the Minimum and Living Wage?

By law the following don’t count towards the NMW or NLW:

  • Tips regardless of whether they are paid via your payroll or given direct to your team by clients (but your salon employees do have to pay tax on them).
  • Pension payments paid to your team.
  • Rewards under staff suggestions schemes.

IMPORTANT:

Deductions which you make from a salon employee’s pay, or payments made by your employee to you, for items or expenses that are connected with the job reduce pay for minimum wage purposes. This includes safety clothing, team uniforms and tools (such as scissors) needed for the job.

 

7. Penalties for failing to pay the correct minimum wage

It is your responsibility as the employer to ensure your salon team are paid at least the minimum rate they are entitled to.

The NMW regulations can be confusing, but the penalty for failing to pay is crystal clear:

It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage.

Learn & Grow

Salons that discover they’ve paid an employee below the correct minimum wage must pay any arrears immediately.

Use HMRC’s National Minimum Wage and National Living Wage calculator to check your salaries and work out arrears.

HMRC has the right to carry out checks at any time and require to see payment records. They can also investigate employers if an employee complains to them. If convicted businesses must pay back the unpaid minimum wage to the employee plus penalties to HMRC.

Naming and Shaming campaign

The government has adopted a high profile ‘naming and shaming’ campaign in the media with a record 600 employers named in 2017/18 as part of ‘naming’ rounds including many beauty and hair businesses.

However, the naming and shaming of employers caught paying under the minimum wage was suspended in December 2018 amid concerns that some businesses were being shamed on technical rather than deliberate breaches. No businesses have been named in 18 months. That said, in 2018-19 the government still completed more than 3,000 investigations, identifying £24m in arrears for more than 220,000 workers.

But there is pressure on the government to start naming and shaming again. Having your salon or clinic called out in the local media for under paying your team is never going to be good for business, your brand or your local reputation.

 

Check your payroll before 1st April 2020

Avoid an admin mix up. Look at your payroll and pay rates now and give yourself plenty of time to check and update.

 

Guide: Salon Recruitment Marketing

Our FREE Recruitment Marketing & Hiring Guide is packed with practical tips, step by steps and ready-to-use recruitment templates.
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