The National Minimum Wage applies throughout the United Kingdom and is due to increase in October 2008.
The adult rate of the minimum wage (for workers aged 22 and over) will increase from its present hourly rate of £5.52 to £5.73.
The development rate (for workers aged 18-21 inclusive) should increase from the present hourly rate of £4.60to £4.77.
NB: The development rate can also apply to workers aged 22 and above during their first 6 months in a new job with a new employer and who are receiving accredited training.
The 16 and 17 year-old rate of the minimum wage will increase from its present hourly rate of £3.40 to £3.53.
The National Minimum Wage does not apply to
people who are genuinely self-employed
people who are under 18
apprentices who are over 18 but under 26 in the first 12 months of their apprenticeships
members of the armed forces and
people who work and live as part of a family (for example au pairs).
There are no exemptions because of the size of business, or because of the sector, job or region.
As well as a worker's basic pay, there are other elements of pay which may count towards the National Minimum Wage hourly rate. These include incentives such as merit or performance-related pay, and bonuses.
Extra money above basic pay (for example, overtime or shift work premiums) do not count. Regional allowances which are not included in an employee's basic pay do not count.
All benefits in kind (benefits other than money), except accommodation, do not count. The accommodation benefit will increase from its its present hourly rate of £4.30 to £4.46 a day.
The number of hours for which workers must be paid the National Minimum Wage is worked out according to the type of work they do. There are four different types of work.
Time work: the number of hours or period of time is set by the employer. You must pay workers at least the National Minimum Wage in each pay period (usually the period of time for which a worker's wage is actually worked out), but you may take account of different hours worked in different periods.
Salaried-hours work: a contract to work a set number of basic hours each year with a yearly salary paid in equal instalments. You must pay workers at least the national minimum in each pay period.
Output work: workers paid purely according to their productivity, for example, how many products they produce or their sales. You may make an agreement, in writing, with a worker that gives a 'fair estimate' of the number of hours they will work. If you do not make an agreement, you must pay the worker at least the National Minimum Wage for the hours they actually work.
Unmeasured work: for workers where there are no set hours or measures of their output. You may make an agreement, in writing, with a worker that estimates the average number of hours they will work each day. If you do not make an agreement, you must pay the worker at least the National Minimum Wage for the hours they actually work.
Workers have a right to:
see their own pay records (if they have good reasons to suspect they have been underpaid)
make a complaint to the enforcement agency, or take their case to an employment tribunal or to a civil court to complain that the employer has not paid them the National Minimum Wage
make a complaint to a tribunal that the employer has failed to produce pay records and
take legal action if they are sacked or victimised because of their right to the National Minimum Wage, or because they have complained about not being paid the minimum wage.
Sacking a worker because they become eligible for the National Minimum Wage, or a higher rate, counts as unfair dismissal. Workers do not have to work for a qualifying period to be protected against this type of unfair dismissal.
The Inland Revenue enforces the National Minimum Wage. In the agricultural sector, agricultural inspectors are enforcing both the National Minimum Wage and the agricultural minimum wage.
It is a criminal offence to
refuse or wilfully neglect to pay the National Minimum Wage
fail to keep suitable records
keep false records and
prevent an enforcement officer from doing their job.
National Minimum Wage officers can issue an enforcement notice if they find that you have underpaid your workers.
This may be followed by a penalty notice. Officers will give you every chance to pay your workers the National Minimum Wage before they give you a penalty notice. From January 2007 new measures came into force to back the minimum wage with tougher enforcement. These include:
£200 plus penalty for underpaying a worker.
Employers who fail to pay the minimum wage can face prosecution, a criminal record and a £5,000 fine.
The government also announced tough new penalties against rouge employers who underpay workers by increasing spending on enforcing the minimum wage.
You can get more information and the following free publications by phoning the National Minimum Wage helpline on Tel 0845 600 0678 (local rates apply):
A detailed guide to the National Minimum Wage (PL 501)
National Minimum Wage - a short guide for employers (URN 01/1145)
National Minimum Wage - a short guide for employees (URN 01/1146)
If you work in the agricultural sector, you can get more information by phoning 0845 000 0134 (England and Wales)
THIS DOCUMENT BASED UPON CROWN COPYRIGHT © 2007