National Minimum Wage - The Rules

IMPORTANT FACT - National Minimum Wage

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid.

VIDEO- Watch this as a quick introduction to the Minimum Wage- ignore any figures as it's from a couple of years ago.

Rates change every April in line with the tax year.

The rates of the minimum wage are decided by the Low Pay Commission.

IMPORTANT FACTS - National Minimum Wage (NMW) Need-to-Knows

• NMW pay is calculated on gross pay (before tax and National Insurance have been taken off).
• Your gross pay includes your basic pay for the work you have done and other types of pay which count towards the NMW, for example sales commission, performance-related pay or other payments based on how well you do your job.
• *Tips and other gratuities DO NOT count towards National Minimum Wage*
• Some payments don’t count towards NMW pay. You should deduct these from your total pay before working out whether you are getting the NMW. Payments which don’t count include loans, wage advances, pension payments, retirement lump sums, redundancy payments, overtime pay, 'on call' and London Weighting. There are more details here.

VIDEO- Watch this as a visual introduction to who is entitled to National Minimum Wage.

IMPORTANT FACTS - Entitlement to the NMW

Most UK workers over the school leaving age are legally entitled to be paid at least the NMW, and all employers have to pay it to you if you are entitled to it. It makes no difference:

• if you are paid weekly or monthly, by cheque, in cash or in another way
• if you work full time, part time or any other working pattern
• if you work at your employer’s own premises or elsewhere
• what size your employer is
• where you work in the UK

You are entitled to the NMW even if you sign a contract agreeing to be paid at a lower rate, regardless of whether you sign 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.

A few types of workers aren’t entitled to minimum wage. This includes:

• Self-employed people
• Volunteers
• Company directors
• Members of the armed forces

For full details see here.

IMPORTANT FACT - Key Signpost

• Pay and Work Rights Helpline: for confidential help and advice on the NMW, call 0800 917 2368

TRIVIA

Increase in National Minimum Wage

• The minimum wage started in April 1999 at £3.60 an hour for workers aged 21+.
• Increase in NMW between April 1999 and October 2010 - 65%
• Increase in prices (RPI) between April 1999 and October 2010 - 37%
• Therefore NMW has increased nearly twice as much as prices over this period.
• Since the end of 2006, however, the NMW has risen broadly in line with both average earnings growth and price inflation (source)

MINIMUM WAGE VS NATIONAL LIVING WAGE

In April 2016 the government introduced a new minimum wage rate for those aged 25+, calling it the National Living Wage. However this is not the same as the Living Wage campaign that calls for employers to pay a fair rate of pay for their workers to live off. The table below explains the difference. More can be found here