As an employer, you are legally required to pay your staff at a rate that is considered to be reasonable for their age, and the work they do. This is called the National Minimum Wage (NMW) and the levels you are expected to pay are regulated by the government. The law applies to all businesses, regardless of size, and most categories of worker (see below). HMRC can take employers to court who do not pay the National Minimum Wage, so it is important to get this right.
It is your responsibility as an employer to ensure that your calculations are correct, and that you are paying your staff the right amounts…
Who is entitled to the National Minimum Wage?
The NMW applies to the majority of workers in the UK. As well as standard full-time employees, workers are also entitled to the NMW if they are:
- Casual labour
- Agency workers
- Homeworkers paid by the number of items they make
- Trainees, or workers during a probationary period
- Foreign workers
- Agricultural workers
- Off-shore workers
Who is not entitled to the National Minimum Wage?
The following types of workers are not entitled to the NMW:
- Workers below school leaving age (usually 16)
- Company directors
- Self-employed people
- Members of the armed forces
- Family members of the employer living in the employer’s home
- Non- family members who live in the employer’s home and are not charged for meals or accommodation (au pairs for example)
- Workers on government pre-apprenticeship schemes
- Higher and further education students on a work placement up to one year
- People on the following European Union programmes – Erasmus, Comenius, Leonardo da Vinci and Youth in Action
- Workers on a government employment programme
- People working on a Jobcentre Plus Work trial for 6 weeks
- Share fishermen
- People living and working in a religious community
Workers carrying out apprenticeships are managed slightly differently. Apprentices are entitled to a specific Apprentice Rate if they are under 19, or over 19 but in the first year of their apprenticeship. Apprentices over 19 who have completed the first year of their apprenticeship are entitled to the appropriate minimum wage for their age.
How much is the National Minimum Wage?
The NMW works on a sliding scale according to age and applies to workers up to the age of 25. Employees over the age of 25 are entitled to the National Living Wage. These rates are increased regularly in-line with inflation. Assuming an employee is entitled to the NMW (see above), the following rates apply:
|Age||Current Hourly Rate||From April 2019|
|21 – 24||£7.38||£7.70|
|18 – 20||£5.90||£6.15|
|16 – 17||£4.20||£4.35|
Your responsibilities as an employer
Calculating payments under the National Minimum Wage can be complicated. There are some things, such as extra pay for working unsociable hours on a shift, that must not be included when the minimum wage is calculated. Equally, there are certain payments that must be taken in to account. It is your responsibility as an employer to ensure that your calculations are correct, and that you are paying your staff the right amounts.
It’s a criminal offence to not pay an entitled worker the National Minimum wage, or to falsify payment records.
If you find the whole process confusing and a little daunting, why not outsource your payroll? At RFHR we offer a range of payroll services that will make sure that you pay your staff the right amount at the right time; so you can concentrate on running your business.