It’s that time of year again when the National Minimum wage is due for a review and the numbers are in. As of 1St April, these new rates apply:
Minimum hourly rate
25+ - £8.21
21-24 - £7.70
18-20 - £6.15
16-17 - £4.35
Apprentices* - £3.90
*younger than 19 and in the first year of their apprenticeship
Who is entitled to NMW?
Your employees are entitled to NMW if they have a contract of employment, are not self-employed, and have ceased to be of compulsory school age. This includes part-time workers, casual labourers and agency workers. The employment contract does not need to be in writing for them to be entitled to NMW, it can be an implied or oral contract as well.
Find out more about NMW entitlement here.
What counts as NMW Pay?
To comply with the National Minimum Wage Act 1998, your employees' average hourly pay over a pay reference period must be equal or greater than the NMW. The pay reference period is the period of time over which your employee is paid. If you pay your staff monthly then their reference period is one month.
Commissions and bonuses count towards the NMW pay, but loans, pension payments and redundancy payments do not. Benefits such as meals, fuel and car contributions also do not count.
To find out more about how to calculate NMW see here.
Finally, Recordkeeping and Reporting Requirements
You, as an employer, are legally required to keep records to show that you are meeting NMW requirements. Fortunately, for most employers, existing payroll and business records are sufficient evidence but you need to hang on to everything. It’s worth noting officers of HMRC have the authority to enter any premises used in your business to ask to check NMW records. Paying your employees less than the NMW, failing to preserve records or refusing to show them to HRMC when they ask may result in criminal prosecution.
Your employees have the right to access their NMW records if they have reasonable grounds to believe that they have not been paid sufficiently. If this were to arise, they must make a written request and you must produce the records within 14 days.
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