National Minimum and Living Wage

Sam Jackson is our Payroll & Accounts Manager at Brampton Recruitment, and runs weekly payroll for all our temporary workers.

Sam is starting off with the basics for her first blog with a reminder of the new National Minimum Wage increases that have recently come into force.

National Minimum Wage – new rates

The National Minimum Wage (NMW) is the minimum hourly rate most workers are entitled to.

New rates listed below come into effect from 1 October 2015.

Rates

The current NMW rates from 1 October 2015 are:

  • £6.70 (previously £6.50) for workers 21 and over
  • £5.30 (previously £5.13) 18-20 yrs
  • £3.87 (previously £3.79) for 16-17 yrs, who are above school leaving age but under 18
  • £3.30 (previously £2.73) for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

It is important to note that these rates, which come into force 1 October 2015, apply to pay reference periods beginning on or after that date.

Key Points

  • Most workers over school leaving age will be entitled to receive the NMW.
  • The NMW rate is reviewed annually by the Low Pay Commission, and any rate changes are introduced in October each year.
  • There are a number of exemptions to those who receive the NMW. These do not relate to the size of the business, sector, job or region.
  • HM Revenue & Customs (HMRC) can take employers to court for not paying the NMW.
  • The minimum rate depends on the age of worker.

The National Living Wage

A compulsory National Living Wage is due to be introduced in April 2016 for all working people aged 25 and over, and will be set at £7.20 per hour. The current National Minimum Wage for those under the age of 25 will continue to apply.

The Low Pay Commission which currently recommends the level of the minimum wage will recommend any future rises to the National Living Wage rate.

The new National Living Wage is different from the Living Wage, which is an hourly rate of pay set independently by the Living Wage Foundation and is calculated according to the basic cost of living in the UK.

If an employer doesn't pay the correct rate, a worker should talk to their employer and try to resolve the issue informally first. If this doesn't work a worker may make a formal grievance to their employer.

A worker can also make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn't paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate to the employer.

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records.

Exemptions

There are a number of people who are not entitled to the NMW.

  • Self-employed people.
  • Volunteers or voluntary workers.
  • Family members, or people who live in the family home of the employer who undertake household tasks.
  • Company directors.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.