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investigating wider worker rights issues, such as holiday pay, may also identify additional potential NMW breaches during their reviews. Payroll compliance Although payroll system processes and associated checks remain unchanged following the April 2026 increases to NMW and NLW rates, employers continue to face challenges and inconsistencies in achieving compliance. For example, if the payroll system isn’t told which of the four specific ‘work types’ for NMW purposes (i.e. salaried hours, time work, output work or unmeasured work) to use for each employee, it cannot perform the correct calculations. Determining the correct work type can itself be complex, as it requires consideration of the wording of contracts and pay entitlements for each worker, alongside how the individual actually performs their role in practice. Impact on the UK workforce Around one in four young people start their careers in retail, and a significant number also work in hospitality. This poses the question of the impact the NMW changes will have on the UK workforce in the short, medium and long term. Not only are we seeing a shift away from employing younger workers, but the hours available for hourly work are also being reduced. As a result, even those younger workers who do find employment have fewer opportunities to earn and gain experience in their early years. April’s employment statistics (https://ow.ly/ GuNH50YYVLM) show that in March, the UK had the lowest number of hours worked in retail in a month since records began. High unemployment among young people could, in turn, lead to a shortfall of workers with early work experience as they reach their mid- 20s. Apprenticeship models may help address this gap, provided that they’re structured to deliver the skills and experience needed for the future workforce. But this is an area we should be focussing on and looking into in more depth.
Chris Robson Employment Tax Partner and Fair Pay Lead, RSM UK
If you’d like to contact Chris, you can do so at chris.robson@rsmukcom
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