PERS leaflet no 14
Feb 16
Promoting, sharing and developing opportunities for
best employment practice
The National Minimum Wage
What you need to know about:
What it is
Who it covers
How much it is
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What is it?
The National Minimum Wage (NMW) is a basic minimum hourly rate of pay to which
most workers are entitled. The government sets the NMW after considering the advice
of the Low Pay Commission, an independent body of representatives from workers’ and
employers’ organisations and other experts.
There are different NMW rates depending on age and whether a worker is being trained
in a new job. See the end of this leaflet for the current rates.
NB: from April 2016 a new mandatory National Living Wage (NLW) for
workers aged 25 and above will come into effect. The NMW will continue to
apply for those aged under 25 with a premium added on top for older
workers taking their total hourly rate to the National Living Wage (NLW).
See Page 7 for rates.
Who is covered?
Most workers aged 16 or over are covered by the NMW. This includes part time and
casual workers as well as agency workers, home workers and people over retirement
age. The rates are the same for all parts of the UK and for all kinds and sizes of firms.
Apprenticeships
There is also a minimum wage for apprentices. An apprenticeship should be clearly
linked to an accredited programme of structured learning. The apprentice rate applies to
apprentices under 19 and those aged 19 or over who are still in the first year of their
apprenticeship. Apprentices aged 19 or over who have already completed a year of their
Apprenticeship are entitled to be paid at least at the full NMW rate appropriate to their
age. Apprentices are those on a contract of Apprenticeship or those on a Government
funded Apprenticeship in England, Northern Ireland, Scotland or Wales.
Internships
There is often confusion about the position of ‘interns’ in relation to the NMW. There is
no legal definition of an internship or of an intern. Essentially an intern is a person who
works in a temporary position, with an emphasis on training rather than just
employment. In some ways an intern is therefore like an apprentice. Some interns are
paid, but a very substantial number are not. Whether an intern is a 'worker' does not
depend on their job title or how they are described but on the nature of the contractual
relationship. It does not matter if this contract is not in writing. In brief, if the internship
is not primarily a work shadowing and training experience and the intern is expected to
undertake work of value to the employer then it is likely that the intern should be paid
at least the NMW appropriate to their age. Failure to pay the NMW to someone who is
entitled to it is against the law.
Who is not covered by the NMW?
Those who work as self-employed, a volunteer, a prisoner, a share fisherman or work for
the armed services or live and work as part of a religious community are not entitled to
NMW.
Those who are non-employed trainees on a government funded scheme, in a workplace
as part of a sandwich course or on post-graduate work experience are also not entitled
to NMW.
Those who live and work as part of a family (for instance, as an 'au pair') are not entitled
to the minimum wage. People doing household chores within their family or for friends
and neighbours do not qualify either.
Agricultural and Horticultural Workers
The Agricultural Wages Boards (AWB) used to agree the pay rates and terms of work for
most agricultural workers. These were generally better than the NMW. The Agricultural
Wages Board in England was abolished on 1st October 2013. Agricultural workers who
have a contract which commenced before this date should keep the terms and
conditions set by the last AWB. Their employer should not make changes to their
contract without their agreement.
Those employed after 1st October 2013 may be offered different terms but these should
not be less than the NMW and other legal minimum terms about holidays etc. and a
written statement of employment particulars outlining terms and conditions should be
provided within 2 months of starting work. For more information see PERS Leaflet 1 Contracts of Employment.
Wages for workers in Scotland and Northern Ireland will continue to be set by their own
Agricultural Wages Boards. The Agricultural Advisory Panel for Wales sets agricultural
wages for Wales.
What counts as wages?
The basic wage must average out at an hourly rate which is no less than the legal
minimum for eligible work done in working time (see below). The average should be
worked out over a normal pay period (usually a week, a fortnight, 4 weeks or a month).
The averaging out period must not be more than one calendar month. The calculation
should be applied to the basic wage. This must include work done on piecework rates
(see below for details). It can include incentive payments or performance bonuses.
Things that should be excluded in calculating the pay rate are: shift premiums,
allowances (such as unsocial hours, ‘on call’, attendance or responsibility allowances),
most benefits in kind, redundancy and pension payments, court awards or settlements.
Tips paid directly by customers to staff should not be used to make up the NMW and
should be paid in addition to it.
Where accommodation is provided as a benefit in kind, a maximum of £37.45 per week
[from October 2015, up from £35.56] or £5.35 per day [from October 2015, up from
£5.08] may be deducted from the calculation. This is known as the National Minimum
Wage Accommodation Offset. It can be adjusted on an hourly or daily basis if the worker
only lives in part-time.
What is 'working time'?
A worker should earn no less than the minimum rate for all hours when they are:
 required by the employer to be at the place of work (that is, not on a rest break
or other time off, or laid off)
 at the place of work (or travelling on employer’s business, or on relevant
training, including training offered as part of an apprenticeship)
 available for work (that is, not sick, on maternity, parental or dependants' leave,
on unpaid holiday or on strike).
Unless they are ‘laid off’ workers should still be paid at least the minimum rate if these
conditions apply but no work is available (for instance, if machinery has broken down or
there are no customers in the shop). If a worker is ‘laid off’ (that is, not required to be at
work- usually because no work is available) for a complete day or more they may be
entitled to guarantee pay. See PERS factsheet - Lay off, Guarantee Pay and
Redundancy.
Most people should also receive their normal pay, which must be at least the minimum
rate, while they are on statutory annual holidays.
Sleep in Shifts
At present, if a worker is allowed to sleep on work premises and is provided with
suitable sleeping facilities (not their place of residence) they should be entitled to the
NMW irrespective of being awake or not. On the other hand, if they are on standby or
on-call during time when they are at home, they do not have to be paid the NMW for
that time.
Calculating the rate of pay
Most people can calculate whether they are getting the NMW by dividing their wage by
the number of hours they work (time work).
For example: A worker is paid £270 per week to work from 8.00am to 5.00pm for 5 days
a week, with one hour (unpaid) for lunch. They work for 8 hours a day, 40 hours a week.
The hourly pay is £270 divided by 40 hours. This is £6.75 an hour.
Some people are paid by output rather than by time. Common examples of this are
piecework, commission work and work done in the home (outwork or homework). In
this case the employer should either pay the hourly rate at no less than the NMW for
each hour that you work or the employer should apply the system of fair piece rates.
This means that the employer will carry out tests to find the speed an ‘average’ worker
would take to complete the work and then set a piece rate so that an ‘average’ worker
can earn at least 120% of the NMW.
What records must be kept by your employer?
Most workers have a right to receive an itemised payslip each time they are paid.
Employers must also keep records of pay and hours worked.
If a worker has reason for suspecting that they are not being paid at or above the legal
minimum, they have the right to ask the employer to let them see and copy the relevant
pay records. If the employer does not produce the relevant information, the worker
should call ACAS (03001231100) within 3 months of the refusal. The worker should write
a grievance letter to the employer first.
Enforcement
NMW teams are part of Her Majesty’s Revenue and Customs. They have powers to
inspect employers’ records, serve a notice of underpayment and to take them to court
for non-payment of NMW.
Workers who want to make a complaint about non-payment of the NMW should
contact ACAS on 0300 123 1100 for advice.
They will take details and advise on how to get the employer to try and sort out the
situation. If the dispute is not settled the case will be followed up by regional
compliance officers. They will visit the employer to check the records and ensure correct
payment.
Workers can also make a claim to an Employment Tribunal (ET) for unauthorised
deductions (but they still need to contact ACAS first). An Employment Tribunal Claim can
also be made if an employee is dismissed in order for the employer to avoid paying the
NMW, or if an employee is dismissed or put at a disadvantage (a detriment) because
they have asserted their rights under the NMW regulations. They will need to contact
ACAS if they intend to do this, see PERS leaflet No 11 Dismissal.
Alternatively they can use the County Court system to recover money which is owed to
them. They are costs associated with making a claim through the ET or the County
Court so potential claimants should seek advice before proceeding.
National Minimum Wage Rates from 1st October 2015
(2014 -15 rates in brackets)
Full adult rate (workers aged 21 and over):
£6.70 an hour (from £6.50)
Youth development rate (workers aged 18 – 20):
£5.30 an hour (from £5.13)
Young workers rate (for workers under 18 but above
the compulsory school age who are not apprentices:
£3.87 an hour (from £3.79)
Apprentice rate (apprentices under 19, apprentices
aged 19 and over in the first year of their
apprenticeship):
£3.30 an hour (from £2.73)
NEW Adult Living Wage from April 16:
Workers aged 25+:
£7.20 per hour
Further Information:
ACAS (Advisory, Conciliation and Arbitration Service) www.acas.org.uk 0300 123 1100
The Government website has a tool to check whether you are getting NMW:
www.gov.uk/am-i-getting-minimum-wage
There is also a form which you can use to complain if you think you are not:
www.gov.uk/government/publications/pay-and-work-rights-complaints-individuals
PERS produce leaflets, factsheets and action packs about your rights at work. These are
free to download and can be found in the publications section of our website at
www.pers.org.uk We can also offer advice on a pay as you go basis currently £10 per 15
minutes on 01924 428030
Employment advice line 01924 428030
Monday and Friday
10am to 1pm
Tuesday, Wednesday and Thursday
10am to 4pm
Evening session Tuesday
5.30pm to 7.30pm
Our service is currently free to some disabled people in Yorkshire and
Humber. Reasonable rates apply for other workers, organisations and
employers. Visit our website for details.
www.pers.org.uk
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information, training and consultancy on HR and Employment Law. We
depend on grant funding and donations to enable us to offer our free
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The information in this leaflet was accurate at the time of going to press. It is intended
as a guide and is not a full statement of the law. Seek advice before taking action. You
can feedback about our service by clicking on the link on our website.
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