National Living Wage and National Minimum Wage

All employees and ‘workers’ over school leaving age are entitled to be paid at least the statutory National Living Wage (NLW) or National Minimum Wage (NMW). This applies whether permanent or fixed-term, full or part-time, agency or casual, apart from the following exempt groups:

  • the genuinely self-employed
  • volunteers
  • trainees on a government or European funded training scheme
  • students on placement, including trainee teachers
  • members of the armed forces
  • prisoners
  • anyone who provides service within a family, for example, an au-pair or nanny

 

The rate of the NLW and NMW depends on the workers age, and is usually increased annually in April for NLW and October for NMW.

 

National Living Wage from 1 April 2016

Workers aged 25 and over - £7.20 per hour

 

National Minimum Wage from 1 October 2016

Workers aged 21 to 24       - £6.95 per hour

Workers aged 18 to 20       - £5.55 per hour

Workers aged under 18      - £4.00 per hour

Apprentices aged under     - £3.40 per hour

19 or in the first year of

apprenticeship

 

You can check if you are being paid the NLW or NMW using the government calculator:

 

https://www.gov.uk/am-i-getting-minimum-wage

 

Previous years rates can be viewed at:

 

Low Pay Commission website

 

Different types of payment can go towards minimum wage, including performance, productivity and incentive payments such as an attendance bonus and profit related pay.

 

Benefits in kind, for example uniforms and meals, are not pay and cannot be used to make up the minimum wage.

 

Where accommodation is provided as part of the contract, it cannot count as a payment of more than £6.00 per night or £42.00 per week from 1 October 2016 towards the minimum wage.

 

Example

Sarah is aged over 25 and works 40 hours per week and is provided with free accommodation. From 1 October 2016 her entitlement to the NLW will be 40 hours x £7.20 per hour or £288.00 gross per week. The accommodation can count as up to £42.00 per week so she must receive gross wages of at least £246.00 in order to meet the NLW.

 

If workers believe that they are not receiving the relevant minimum wage, they have the right to inspect an employer’s pay records. If they are not being paid the minimum wage they can take the employer to an employment tribunal.

 

Any employee or worker who tries to enforce their right to the NLW or NMW has a right not to suffer any “detriment” as a result eg by having their hours reduced.

 

Employees who are dismissed for trying to enforce the NLW or NMW can complain to an employment tribunal of unfair dismissal, regardless of length of service. If a worker who is not an employee is dismissed, they can claim that they suffered a “detriment” (since workers cannot claim unfair dismissal).

 

HMRC has responsibility for enforcing the NLW and NMW (and conducting prosecutions against employers who do not pay it). They can be contacted through the government’s Pay and Work Rights Helpline, on 0800 917 2368. They can be particularly useful where a worker wants to ensure that all workers in the organisation get the NLW/NMW, or where the worker does not want the employer to know they have complained – an anonymous complaint can be made. If HMRC uphold a complaint they can order the employer to pay back pay.

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