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  • The National Minimum Wage

    What is the National Minimum Wage? 
    The National Minimum Wage is a minimum hourly rate of pay which a worker’s pay must not fall below. It became statute on 1st April 1999 to set a minimum benchmark and to prevent excessively low pay to workers. It is a legal right which applies to almost all UK workers. The National Living Wage applies from April 2016 to workers aged 25 and over. It is therefore important to check that you are still complying with the law.

    What are the rates of the National Minimum Wage? 
    The current rates as from 1st April 2017 are: 
    • £7.50 an hour for those aged 25 and over 
    • £7.05 an hour for workers aged 21 and over 
    • £5.60 per hour for those aged 18 to 20 (Youth Development Rate) 
    • £4.05 per hour for those aged 16 to 17 
    • £3.50 an hour for apprentices under 19 or in the first year of their apprenticeship 
    • £6.40 per day for accommodation offset

    If a worker suspects that their employer is not paying them the National Minimum Wage they can make a complaint about their employer to the HMRC.

    If a worker suspects that their employer is not paying them the National Minimum Wage they can make a complaint about their employer to the HMRC.

    HMRC is responsible for enforcing the National Minimum Wage and as well as responding to complaints received by workers they also conduct ad hoc visits to employers to ensure compliance of the National Minimum Wage to workers. If you are found to not pay the National Minimum Wage then you may face a penalty of 200% of the arrears of payments you have not made (increased from 100% as from 1st April 2016), up to a maximum of £20,000 per worker. There is also a risk of criminal prosecution for deliberate failure to pay the National Minimum Wage.

    Who is eligible for the National Minimum Wage? 
    The National Minimum Wage applies to adult workers that are: 
    • Working legally in the UK 
    • Not genuinely self-employed 
    • Have a written, oral or implied contract

    Salary Sacrifice and deductions 
    Employers with salary sacrifice arrangements must remember that the actual wages the employees receive, after the salary sacrifice, must not fall below the National Minimum Wage.

    If an Employer is considering making any other deductions from employees’ wages they should be cautious and ensure the deductions are not taken into account for National Minimum Wage purposes. 

    The above information is not intended to be a complete or definitive statement of the law. For more information or advice please contact our Employment Law team.




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