Helpful Advice for Employers

Page Contents

National Living Wage and National Minimum Wage
Employee Entitlement to Holiday pay
Employment Allowance
National Insurance
Current Rates (Category A)
PAYE and Payroll
Workplace Pension
Useful Links

National Living Wage and National Minimum Wage

National Living Wage

Employees must be aged 21 and over to receive the National Living Wage.

National Minimum Wage

The National Minimum Wage applies to employees from school leaving age to 20 years old.

Apprentice Rate

Apprentices who are 19 and under or over 19 and in their first year of apprenticeship are entitled to the apprentice rate.

Current Rates

The rates for the National Living Wage (for those aged 21 and over) and the National Minimum Wage (for those of at least school-leaving age) are below:

	21 and over	18 to 20	Under 18	Apprentice
April 2024	£11.44	£8.60	£6.40	£6.40
April 2025	£12.21	£10.00	£7.55	£7.55

These rates change on 1 April every year.

Further information can be found at: National Minimum Wage and National Living Wage rates - GOV.UK

Employee Entitlement to Holiday pay

Almost all workers are entitled to 5.6 weeks of holiday pay, which is paid pro rata for part-time workers. Most workers who work a five-day week must receive at least 28 days of paid annual leave a year, which is the equivalent of 5.6 weeks of holiday. Bank holidays can be included as part of statutory annual leave.

For term-time employees, there are different ways to consider paying holiday pay entitlement:

Example 1

Employee hours per week x 43.6 weeks (38 weeks worked plus 5.6 weeks holiday pay) / 12 months = monthly pay for 12 months.

Example 2

Employee hours per week x 5.6 weeks holiday pay paid annually in August. Please note: if an employee leaves the holiday pay entitlement would need to be calculated to ensure the correct amount of holiday pay has been paid.

Example 3

Employee hours per week x 1 week (Autumn term), x 1.6 weeks (Spring term), x 3 weeks (Summer term).

Please note: if an employee leaves the holiday pay entitlement would need to be calculated to ensure the correct amount of holiday pay has been paid.

Further information, including a holiday pay calculator, is available at Holiday entitlement: Entitlement - GOV.UK

Employment Allowance

Businesses and charities, including community amateur sports clubs, can claim Employment Allowance if their employers’ Class 1 National insurance liabilities were less than £100,000 in the previous tax year.

Eligible employers can reduce annual National Insurance liability by up to £5,000. Each time the employer runs the payroll, less Class 1 National Insurance will be paid until the £5,000 has gone or the tax year ends (whichever is sooner).

Employment Allowance can be claimed for the previous four tax years.

If part of a group of charities/companies the Class 1 National Insurance liabilities for the group must be less than £100,000 in the previous tax year. Only one group can claim the allowance.

If employers have more than one employer PAYE reference, the total employers’ Class 1 National Insurance liabilities for the combined payrolls must be less than £100,000 in the previous tax year.

Further guidance can be found at Employment Allowance: What you'll get - GOV.UK

From April 2025, the Employment Allowance will increase from £5,000 to £10,500 and the eligibility threshold of £100,000 in the previous tax year will be removed.

National Insurance

An employee’s Class 1 National Insurance is made up of contributions deducted from their pay (employee’s National Insurance) and paid by their employer (employer’s National Insurance).

How much is paid depends on the employee’s National Insurance category letter and how much of the employee’s earnings falls within each band.

Current Rates (Category A)

Employees

Most employees fall within Category letter A. The current rates for Category letter A are as follows:

£123 to £242 a week	£242.01 to £967 a week	Over £967 a week
£533 to £1,048 a month	£1,048.01 to £4,189 a month	Over £4,189 a month
0%	8%	2%

Employers

£123 to £175 a week	Over £175.01 a week
£533 to £758 a month	Over £758.01 a month
0%	13.8%

National Insurance Class 1A and Class 1B rates must also be paid on expenses and benefits, and some other lump sum payments such as redundancy payments.

Further information about all Category letters, calculators, and tables, can be found at: National Insurance rates and categories: Category letters - GOV.UK

From Sunday, 6 April 2025, the employer rate will rise from 13.8% to 15%.

PAYE and Payroll

Employers operate PAYE as part of their payroll. PAYE is an HM Revenue and Customs (HMRC) system to collect Income Tax and National Insurance from employment.

Employers must register for PAYE if any of the following applies to an employee in the current tax year:

Paid £123 or more a week

Receive expenses and company benefits

Opted in a pension

Had another job

Received Jobseeker’s Allowance, Employment and Support Allowance or Incapacity Benefit.

If employers do not need to register, payroll records are still required.

When paying employees through payroll employers need to make deductions for PAYE.

Payments and Deductions

When paying employees through payroll (salary/wages, bonuses, statutory pay), employers need to make deductions for PAYE. For most employees tax and National Insurance will be deducted, but employers may also need to deduct pension contributions and/or student loan repayments.

Reporting Pays and Deductions

Employees’ payments and deductions to HMRC are reported on or before each payday. Payroll software calculates how much tax and National Insurance is owed, including employer’s National Insurance contributions.

Another report is required to claim any reduction on what is owed to HMRC, for example, statutory pay.

Paying HMRC

Within payroll software, employers can view what is owed to HMRC based on reports. Usually, HMRC is paid every month. However, small employers who expect to pay less than £1,500 a month can arrange to pay quarterly.

Further information is available on this link: PAYE and payroll for employers: Introduction to PAYE - GOV.UK

Workplace Pension

Employers must set up a workplace pension scheme for eligible staff if one is not already offered that meets the rules.

Employers must pay at least 3% of employees ‘qualifying earnings into the workplace pension scheme. Employers will need to check what counts as ‘qualifying earnings’ on the workplace pension scheme used.

Under most schemes, it is the employee’s total earnings between £6,240 and £50,270 a year before tax. Total earnings include salary/wages, bonuses/commission, overtime, statutory sick pay, statutory maternity, paternity, or adoption pay.

Employers must deduct pension contributions from employees' pay each month. These must be paid into your employee’s pension scheme by the 22nd day of the next month. Employers may be fined if paying late or minimum payment is not paid for each employee.

Further support including The Pensions Regulator’s tool for employers is available at: Set up and manage a workplace pension scheme: Employers and eligible staff - GOV.UK