EMPLOYERS in York are being warned to prepare carefully for tighter rules governing payment of the increased national minimum wage, which come into force on October 1.

John Machin, president of York Society of Chartered Accountants, said businesses needed to look closely at the changes, even though they mainly affected payments to pieceworkers and subcontractors who may be entitled to higher rates.

In future, home-based pieceworkers will be entitled to a rate for the job equivalent to the full new minimum wage of £4.85 an hour, instead of only 80 per cent of National Minimum Wage (NMW).

Employers who think their subcontractors are exempt could find themselves breaking the law.

Mr Machin, partner at Creers in York, said employers should assess the impact of higher wage bills, and ensure their methods and rates of pay complied with the new regulations.

"Many firms have assumed their self-employed subcontractors working from home, such as seamstresses and commission-only salespeople, weren't covered by the National Minimum Wage, but they may well be wrong.

"The reality is that the minimum wage is payable to all workers if they're not carrying out a genuinely independent business, and any written agreements to the contrary won't change that."

Mr Machin said the increase for pieceworkers amounted to nearly 35 per cent, and would rise again next April when they would be entitled to 120 per cent of NMW.

Another change is that for the first time, 16 to 17-year-olds must be paid at least £3 an hour.

He said: "Businesses should be aware that all this may represent a significant uplift in their costs.

"They may need to review their pricing structure to ensure that they continue to maintain their profit margins."

Updated: 09:41 Thursday, September 02, 2004