If you are lawfully hired, you are entitled to at least the NMW
What is National Minimum Wage?
The national minimum wage (NMW) is a legal right to a minimum hourly rate of pay covering almost all workers in the UK above the school leaving age. It is divided into rates that apply to workers of different ages.
Employers are legally obliged to pay workers at least the NMW, worked out over a period called the ‘pay reference period’. The pay reference period is the interval at which you are paid: a monthly salary or weekly wage. It cannot be in any case longer than a calendar month.
This means that if you are a worker entitled to the NMW, your employer would be breaking the law if they didn’t pay you an average hourly pay of at least the NMW rate you are entitled to.
Your employer cannot make an agreement with you to pay you less than the NMW. You are entitled to the NMW even if you sign a contract agreeing to be paid at a lower rate, either of your own free will or because your employer persuades or makes you. The contract will have no legal effect and you must still be paid the proper rate.
If you are a worker from outside the UK and you are legally working in the UK you are entitled to the NMW just as anybody else. It doesn’t matter how long or short a time you stay here or whether your employer is based in the UK or somewhere else.
What are the current National Minimum Wage rates?
The amount that an employer must pay depends on the age of the worker. Currently, there are 4 rates, which are usually updated in October each year.
The rates that apply from 1st October 2011 are as follows:
• Adult rate – aged 21 and over – £6.08 per hour (up from £5.93 in 2010-2011)
• Development rate – aged 18-20 – £4.98 per hour (up from £4.92 in 2010-2011)
• Minors rate – aged 16-17 – £3.68 per hour (up from £3.64 in 2010-2011)
• Apprentices rate – aged under 19, or 19+ in first year apprenticeship – £2.60 per hour (up from £2.50 in 2010-2011)
Am I entitled to National Minimum Wage?
You are entitled to the NMW if all of the following apply:
• you have a contract of employment. The contract does not have to be in writing: it may be implied (i.e. reflecting what happens in practice in the workplace) or oral (i.e. a spoken agreement of work);
• your contract entitles you to a monetary payment (i.e.. cash or other form of financial payment) or a benefit in kind, not simply the reimbursement of genuine out-of-pocket expenses;
• you have to provide work for the duration of the contract or arrangement;
• you have to turn up for work even if you don’t want to;
• you have to perform the work personally for your employer and you only have a limited right to send a substitute;
• your employer is not your client or customer. Being registered as self-employed for tax purposes does not necessarily make you self-employed for NMW purposes.
Workers entitled to the National Minimum Wage
If you are one of the following types of worker, you should receive the NMW:
• Employees: including part-time workers;
• Agency workers: the agency rather than whoever you are sent to work for, is regarded as your employer for NMW purposes;
• Apprentices: If you are aged 19 or over and have completed the first year of your apprenticeship you are entitled to the main rate; otherwise you are entitled, from October 2010, to the Apprentice Minimum Wage;
• Trainees or workers on a period of probation: Exemptions for some apprentices and workers on training courses apply;
• Output workers or ‘piece workers’: you are entitled to NMW or a ‘fair’ piece rate for each piece produced or task performed. The ‘fair’ piece rate is 1.2 times the rate which lets a worker of average speed earn the NMW in an hour;
• Agricultural workers: you are entitled to the higher Agricultural Minimum Wage;
• Commission worker: even if you are paid completely or partly by results;
• Homeworkers: unless you are running your own business;
• Seafarers: If you are working or usually work in the UK (which includes its internal waters, meaning estuaries and the sea between the UK mainland and many islands) you are entitled to the NMW, no matter where your ship is registered. You are entitled to the NMW, wherever in the world your ship may be, if you are working on UK-registered ships, unless you work only outside the UK or you don’t usually live in the UK;
• Offshore workers: If you are working or usually work in UK territorial waters or in the UK or the foreign sector of the continental shelf (for instance on oil rigs); this doesn’t apply to workers on ships which are in course of navigation or are dredging or fishing;
• European Social Fund programmes;
• Working abroad: If you usually work in the UK but are temporarily working outside the UK, you are entitled to the NMW;
• Government employment schemes: Some government employment schemes, such as the New Deal, may entitle you to the NMW; some may give benefits instead. Check with the organizers.
Workers not entitled to the National Minimum Wage
If you are one of the following types of worker, you are not entitled to receive the NMW:
• genuinely self-employed people: however, if you believe you are a worker but your ‘employer’ says you are self-employed, it is up to them to prove you are self-employed if there is a dispute about NMW which goes to an Employment Tribunal;
• company directors (except when they are working under a contract of employment);
• workers still of compulsory school age: under the Children and Young Persons Act no child under 13 may be employed, although there are exceptions for performing arts, such as acting, governed by strict rules;
• students on work placements of less than one year that is undertaken as part of a UK further education or higher education course;
• people taking part in the European Union’s Leonardo da Vinci, Youth in Action, Erasmus and Comenius programmes;
• People living in a religious or other community whose purpose is to practice or promote a belief of a religious or similar nature;
• people taking part in certain government or EU funded schemes and programmes
• people employed in certain government employment programmes, if the programme is meant to provide you with training or work experience, or to help you get or look for work;
• people taking part in certain government schemes at pre-apprenticeship level: Entry to Employment or Programme Led Apprenticeships (England); Get Ready for Work (Scotland); Access (Northern Ireland); Skillbuild (Wales) ;
• volunteers: however, if the arrangements under which you ‘volunteer’ add up to an employment or worker’s contract, you will be entitled to the NMW unless a specific exemption applies (e.g. the exemption for ‘voluntary workers’);
• voluntary workers: you should receive no more than limited expenses and benefits in kind;
• people living in their employer’s household: If you share in the household’s work and leisure activities (e.g. au pair);
• Share fishermen: if you receive part of the proceeds or profits from a catch instead of getting a fixed wage or salary;
What counts as National Minimum Wage Pay?
NMW pay is calculated on the gross pay (i.e. the pay received before income tax and National Insurance have been deducted) you receive over the pay reference period (the interval at which you are paid: a monthly salary or weekly wage).
Your gross pay includes your basic pay for the work you have done plus other types of pay which count towards the NMW, such as:
• Incentive payments, which count towards NMW pay if they relate solely to your performance as a worker and are made as part of an incentive, sales commission, merit or any performance-related pay scheme.
Pay that doesn’t count as National Minimum Wage Pay
Total pay for NMW purposes excludes payments that are:
• advances of wages
• pension payments
• retirement lump sums
• redundancy payments
• rewards under staff suggestion schemes
There are other amounts that don’t count towards the total NMW Pay
• tips, gratuities, service charges and cover charges (since 1st October 2009 these amounts no longer count towards NMW pay, regardless of whether they are paid through your payroll or are given directly to you by customers or a tronc master);
• any premium element (in other words, anything you are paid on top of your basic pay) for working at special times, e.g. overtime, week-end or night shifts or bank holidays;
• allowances other than those linked to performance, for example for working unsocial hours, in a particular area, in dangerous conditions, ‘on call’, or performing special duties over and above your normal ones;
• payments to reimburse expenses;
• some payments in respect of absences.
The Accommodation Offset Rate
If your employer provides you with accommodation, they can count some of its value towards National Minimum Wage (NMW) pay.
This is called the ‘accommodation offset’.
From 1st October 2011, the maximum amount your employer can count towards NMW pay as an accommodation offset is:
• £4.73 a day
• £33.11 a week
As well as accommodation itself, any charges you have to pay to your employer for gas, electricity, laundry and furniture are added to the rent for the purpose of calculating the accommodation offset.
In all cases, your employer cannot count more than the accommodation offset rate which is in force at any given time.
The accommodation offset applies where any of the following apply:
• the accommodation is provided in connection with your contract of employment
• keeping your job depends on occupying the accommodation
• occupying the accommodation depends on staying in your job
Other benefits in kind
As well as accommodation, your employer may provide you with other ‘benefits in kind’ such as a uniform or meals. However, accommodation is the only benefit in kind whose value can be counted towards NMW pay.
If you believe you are being underpaid
If you believe you are being underpaid, you can ask your employer to be shown your pay records. Employers are required to keep records relating to the NMW for at least three years.
You have to ask them in writing, and they have to produce the records within 14 days of your request, or at a date which you agree with them. You can take someone else with you to inspect the records, as long as your written request says so.
If you realise you have not been paid at least the NMW requirement, then your employer must work out and pay the arrears to you. Since 6th April 2009, you are entitled to have any arrears paid at the current NMW rate, if it is higher than the rate in force when the arrears came about.
If you prefer not to approach your employer
You can ask HM Revenue and Customs to investigate for you: the role of HMRC is to enforce the national minimum wage.
Your complaint will be investigated on your behalf. If the underpayment is confirmed, the HMRC will issue a notice of underpayment, in which your employer will be ordered to pay you any back pay you are owed (‘arrears’) and also the penalty owed to HMRC.
You can also call the Pay and Work Rights Helpline on tel. 0800 917 2368 for free, confidential advice on pay issues; the National Minimum Wage helpline on 0845 6000 678; or the Agricultural Minimum Wage Helpline on 0845 000 0134.
Claims to Employment Tribunals and civil courts
If your employer fails to pay you arrears, HMRC can bring a case to an Employment Tribunal or civil court on your behalf to recover the money.
Alternatively, if your employer will not let you see their pay records, you can bring your own case to an Employment Tribunal.
If you win your case, the Employment Tribunal will order your employer to pay you an amount equal to 80 times the hourly rate of the NMW in force at the time they make the order.
You have three months from the last time you were paid below NMW to make a claim to an Employment Tribunal.
If you first raise a grievance with your employer within three months, the timescales for making a claim to a tribunal can be extended to six months.
By Federica Gaida,
Disclaimer: The above article is meant to be relied upon as an informative article and in no way constitutes legal advice. Information is offered for general information purposes only, based on the current law when the information was first displayed on this website.
You should always seek advice from an appropriately qualified solicitor on any specific legal enquiry.