At the start of each new tax year, Fourth updates the rates of pay for both the National Minimum Wage (NMW) and National Living Wage (NLW) in the backend of the system.
The National Minimum/Living Wage Rate Update is then used by businesses to set all hourly paid employees to a rate of at least the NMW/NLW (according to the age of the employee at the effective date).
It is the responsibility of each business to run the update to increase the hourly rate for any eligible employees.
This article provides guidance on running this update, and includes important information regarding Job Titles.
There is an FAQ section at the end.
Running the NMW/NLW Rate Update
- Log in to the HR module and go to Employees > NMW/NLW Rate Update
- Enter the Effective Dave for the update and select the relevant Country
- Run a Preview to see all employees on their current rates
A CSV file containing employee pay amounts and details will be downloaded
- Check through the CSV file to review current rates and then when ready, select Update
The new rates will then be applied on the selected date and another CSV file that shows the changes will be downloaded.
Fig.1 - NMW/NLW Wage Rate Update
Information on configuring the NMW/NWL Update can be found here - Release Notes WFM: NMW NLW Update to Exclude Employees from non-UK Sites
Running the update will set all employees to at least NMW, ensuring the business is compliant. However, the update does not automatically update the bandings within job titles. These should be manually updated to ensure that new starters are not employed under the minimum wage.
If bandings are in place an employee's pay rate will automatically update when they move from one age band to another.
Within the Job Titles area of the system, it is possible to link rates of pay for upper and lower job title bandings.
- Go to HR > Company Admin > Job Titles > select Job Title > Link pay rate
- Against 'Edit Job Title', use the orange down arrow and select Link Rates of Pay (in the 'classic UI' go to Job Titles > Link Rates of Pay)
- Tick the box to Link rates of pay to job titles and then enter Minimum and Maximum rates of pay
- When ready, Save the changes
Fig.1- Updating pay bandings
Reminders can be set up in HR to alert users that an employee is going to have a significant birthday (moving to a different age band) in that month.
- Go to HR > Audit & Alerts > Reminder set up
- Create or edit a reminder template and assign users, events, and job titles as required
Reminders are delivered on the 1st of each month and can be set up to be delivered to multiple recipients; either to a Location email or to an individual's work email.
Frequently Asked Questions
I want to run the NMW/NLW update for a future date. What will this affect?
Best practice is to run the update in advance and enter an effective date.
- All employees who fall below the NMW/NLW on the effective date. This includes multiple employments.
- Rota costs will update on the effective date, therefore this will not display within the rota wage cost until the effective date arrives. For example, if the rota for W/C 23rd march is open prior to running the update, the rota wage cost will not change until the effective date of 1st April has arrived. To view the updated rota wage cost, rotas must be deleted and a new one created.
If an employee is paid more than NMW and we use the NMW/NLW batch update - does the employee fall back down to the NMW rate?
No – If the employee is paid over the NMW they will hold their rate. They will not appear on the file that is generated from running the NMW/NLW preview, therefore they will not be included in any update.
If I increase my pay bandings above NMW, will the NMW rate or the minimum pay banding rate apply?
If the lower pay banding is set at £8 and NMW is £6.70, the £8 will apply to all employees on that job title. The same is true for National Living Wage.
What happens if I run the update in advance and an employee has a significant birthday (for example, from 24 to 25) and the job title they are on has a higher wage banding rate that the National Living Wage?
The employee will change to the new pay rate when their age changes.
What happens if I run the update in advance and an employee has a significant birthday (for example, from 24 to 25) and their job title has no bandings in place?
The employee will stay on the same rate. The NMW/NLW update can be run regularly to ensure all employees' rates are up to date.
When does the 'significant birthday' update happen?
The update will happen as part of the overnight process. If an Employees birthday is 2nd April, all hours scheduled on the 2nd will be at the new pay rate.
If an employee has their 25th birthday after the 1st of April, does the system update their rate of pay to the NLW automatically?
No - Running the NMW/NLW update preview with an effective date of the 1st of April will not show the employee as they are still 24. If this is run on the 2nd of April, the employee will now appear as they are now 25. However, if pay bandings are in place the system will update their rate on their birthday.
If I run the update and then want to change an employee's pay rate, what will happen?
Employees' pay rates can be individually managed through the employment details page as normal or via the employee batch update. If the rise takes them above the impending NMW they will stay on the highest pay rate.
I have run my update with an effective date in the future but now I need to change a multiple employment.
The system will not be able to make this change as it is a conflict of information. This multiple employment will need to be ended and the new rate entered.
I want to pay my employees £8, how do I do this quickly?
The quickest way to pay employees the same rate is via the employee batch update.
Employee>Employee Batch Update> Shift/Hourly rate
How do I pay a different rate of pay to employees in central or outer London?
In order to pay employees a different rate by location is to do this via the employee batch update, you can select the location you wish to change and apply the change accordingly. Alternatively, another set of job titles can be created with separate bandings for central/outer London and assigned to the correct locations
What happens to Apprentices moving from 19 to 20 years of age?
The employee will still be on the apprentice wage, the system will not move them to be on a higher rate even though their apprenticeship has ended, and the job title they are on has pay bandings. This means that Employees may fall below NMW if they have been on an apprenticeship for one year. If the NMW/NLW batch update is run, these employees will be included in the generated file.
Employees who are entitled to be increased from the Apprentice Wage to National Minimum Wage will need to be managed manually. Pay bandings will not automate this raise.
The figures below are for the pay period starting on or after 1st April 2023.
|Old rate per hour
|New rate per hour
|16 to 17 years old
|18 to 20 years old
|21 to 22 years old
|23 years old onwards (NLW)
The current rates can also be found here - https://www.gov.uk/national-minimum-wage-rates