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Guide to the National Minimum Wage
The national minimum wage (NMW) was first introduced by the National Minimum Wage Act 1998. Since that Act, a number of amending regulations and secondary regulations were enacted.
These regulations were consolidated into the National Minimum Wage Regulations 2015. This is now the definitive piece of legislation for minimum wage laws.
The National Living Wage (NLW) was introduced from 1 April 2016 by the National Minimum Wage (Amendment) Regulations 2016.
Alongside the legislation, the Department for Business, Energy and Industrial Strategy have produced a guidance document which is regularly updated. Acas also have additional guidance available for organisations.
The following sections provide an in depth look at the rule and regulations surrounding the NMW:
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Entitlement to minimum wage and exemptions
Generally, the NMW applies to all workers over compulsory school age who ordinarily carry out work in the UK. As such, it does not matter what label is given to the individual; so long as they are carrying out work to fall within the definition of a worker they will be entitled to NMW. This [u2026]
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National minimum wage rates
This information is correct as of November 2021. To ensure you are accessing the correct information, please check the Governmentu2019s information on National Minimum Wage. The NMW and National Living Wage (NLW) is set by the government. Each year, the Low Pay Commission, an independent body, is tasked with reviewing the current minimum wage rates [u2026]
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Minimum wage and trial periods
As part of a recruitment process, candidates may be asked to carry out work trials in order to assess their suitability for the role. Care must be taken to ensure the candidate cannot be classed as a worker during these situations and work trials should not be used in order to facilitate additional, unpaid work. [u2026]
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Minimum wage for agricultural workers
Agricultural workers are classed as workers meaning they areu00a0entitled to minimum wage under the legislation. In this sector, however, workers may be entitled to receive a higher Agricultural Minimum Wage (AMW) that is set by Wages Boards across the UK. The current position on AMW depends on where the worker is located and, in some [u2026]
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Calculating whether national minimum wage is paid
To calculate whether NMW or NLW is paid, the workeru2019s average hourly pay will need to be determined. To determine the average hourly pay, the workeru2019s total amount of pay received over the pay reference period is divided by the total number of hours worked by the worker in the same pay reference period (see [u2026]
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Calculating pay and deductions
Employers should use gross pay to determine whether they comply with the NMW legislation. Most financial rewards (including incentives, piecework payments, sales commission and performance-related pay awards) count towards the calculation of pay for entitlement to the NMW. However, some things, such as non-consolidated regional allowances, unsocial hours payments, on-call allowances, additional premiums for working [u2026]
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Reference period and enforcement
Reference period Wages can be averaged over a reference period to establish whether the NMW has been paid. This means that workers need not necessarily be paid the NMW for each individual hour they have worked, but they must receive the minimum rate as an average over the period concerned. The pay reference period is [u2026]
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Minimum wage records
The National Minimum Wage Regulations 2015 require employers to maintain records which show the worker is being paid at least NMW or NLW. Records can be kept on paper or electronically but must be able to produce an individual document which relates to each pay reference period. As a minimum, records must be kept in [u2026]
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Voluntary living wage
The Living Wage is calculated each year based on evidence regarding the everyday cost of living in London and the UK. The new rates are announced each year on the first Monday in November. From their announcement, employers have up to six months to implement the new rates, although they are encouraged to increase wages [u2026]