National Minimum Wage changes: Remember to update your employment contracts

Kevin Bennett

January 08 2021

New employment legislation affects the terms and conditions of employment, that much is obvious. When introduced, it poses these two questions:

  1. Must an employer issue a new contract (Statement of Main Terms)?
  2. Does the new contract (Statement of Main Terms) need to be signed?

Changes to the Northern Ireland National Minimum Wage (NWM) are due in April. In preparation, we answer the above questions for you below.

How should an employer react to employment legislation changes?

Compliance with changes to employment legislation, such as NMM increases, is crucial. Otherwise, employers risk being in breach of legislation and facing an Unlawful Deduction of Wages claim.

Communicate any changes to your employees through an 'amendment to contract' letter. This letter will stipulate their new rate of pay if they fall below the new rates. There’s no need to issue a new contract in its entirety as many terms within the statement would remain the same, e.g. annual leave entitlement.

It’s best practice for employees to acknowledge this amendment. Yet, this is a change to remain legally compliant. So, you don’t need to await a signature or agreement from an employee before making changes to their rate of pay.

The same applies to employees on maternity leave in respect of Statutory Maternity Pay. They should be notified of the increase in the rate when it increases but, you don’t need to receive agreement.

If you wish to amend rates of pay beyond NMW, you will need to seek agreement. As odd as it may sound for an employee not to want to receive more money, it could affect any benefits they may be in receipt of or negatively impact their finances.

What is the National Minimum Wage in Northern Ireland?

The incoming increases to the NWM in Northern Ireland are as follows:

April 2020

April 2021

Age

Rate

Age

Rate

25+ (National Living Wage)

£8.72

23+ NLW

£8.91

21 – 24

£8.20

21 – 22

£8.36

18 – 20

£6.45

18 – 20

£6.56

Under 17

£4.55

Under 17

£4.62

Apprentice

£4.15

Apprentice

£4.30

Do you have questions about the National Minimum Wage?

If you have questions about the National Minimum Wage and are looking for instant answers, speak to a Peninsula advisor now on 0800 917 0771.

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